Environmental protectionism: The case of CAFE

- In 2011 the US altered automobile fuel economy standards to vary with vehicle size.
- The switch favored domestic vehicles over imports.
- The switch was equivalent to a tariff on imported vehicles

In 2011 the US changed its automobile fuel economy standards from a uniform, fleet-wide average, miles-per-gallon target, to one that varies with car sizes. Smaller cars now must meet stricter standards. While the motive for any policy change can be disputed, the consequence of this change looks like environmental protectionism, because the favored larger cars are disproportionately assembled in the US. The change imposes costs on imported cars equivalent to a tariff of $50 to $200 per vehicle.