Foreign Pollution Fee Act of 2025

This bill amends the Internal Revenue Code to impose a fee on certain imported products based on the pollution intensity of their production, aiming to level the playing field for U.S. manufacturers facing higher environmental compliance costs compared to foreign competitors with weaker standards.

Title I, Foreign Pollution Fee: Adds a new subchapter to the Internal Revenue Code establishing a foreign pollution fee on imported covered products. It defines key terms like pollution intensity, baseline pollution intensity (U.S. production level), direct and indirect emissions, and carbon dioxide equivalent. The fee is imposed on the importer of record, with a variable charge based on how a product's pollution intensity compares to the U.S. baseline. The Administrator of the EPA and an Advisory Committee on Global Pollution Challenges are involved in implementation.

Title II, International Partnership Agreements: Authorizes the U.S. Trade Representative to negotiate agreements with foreign countries to establish interoperable pollution reduction methods and reduce fees between partners. Nonmarket economy countries are excluded. Requirements include compatible monitoring and verification methods. Low-income and lower-middle-income countries may receive phased-in treatment, including a temporary fee exemption. A process allows facilities in partner countries to apply for facility-specific pollution intensity treatment if they meet eligibility requirements, including real-time monitoring and U.S. access.

Title III, Other Matters: Requires the Secretary of the Treasury to submit an annual report to Congress describing efforts to help U.S. manufacturers counter unfair competition, assessing the U.S. competitive advantage in greenhouse gas intensity, and evaluating the Act's impact on the trade deficit and economic activity. Biennial reviews must assess whether the Act is achieving its policy goals.