Aimed at determining whether China’s active carbon emission reduction policy can respond to the threat of carbon tariff of the USA, this study proposed two kinds of carbon tax schemes for the USA and China, same carbon tax policy and a differential carbon tax policy. Four scenarios are set: the USA only charging carbon tax on domestic products; the USA charging carbon tax on domestic products and carbon tariff on imported products from China; the USA and China taking the same carbon tax policy on domestic products; the USA and China taking the differential carbon tax policy on their domestic products. Global Trade Analysis Project Energy model is applied to discuss whether China’s active measure to reduce carbon emissions can be an effective solution to the threat of carbon tariff of the USA. The research results show that China’s active measure of the same carbon tax policy as the USA is not effective to cope with carbon tariff of the USA. However, it is an effective measure to take a differential carbon tax policy. The specific policy implications of the study are discussed in conclusion.

Abstract
    1 Introduction
    2 Literature review
        2.1 The effect of carbon tariff on macro-economy
        2.2 The effect of carbon tariff on reduction of carbon dioxide emissions
    3 Model construction
        3.1 Model description and assumption
        3.2 Data and methodology
        3.3 Different carbon policy scenarios
    4 Simulation results and analysis
        4.1 The effect of different carbon policy scenarios on real GDP of the world
        4.2 The effect of different carbon policy scenarios on resident welfare of the world
        4.3 The effect of different carbon policy scenarios on carbon emissions of the world
        4.4 The effect of different carbon policy scenarios on industry output of China
        4.5 The effect of different carbon policy scenarios on exporting of China
    5 Conclusion and policy recommendations
    Acknowledgements 
    References

• Linrong Zhang(School of Finance and Economics, Jiangsu University)
• Dan Jiang(School of Management, Jiangsu University)
• Muhammad Imran(School of Finance and Economics, Jiangsu University)