Sin Tariffs and the Waste Trade

A Pigouvian ‘sin’ tax is a form of taxation used to reduce the negative externalities caused by socially and thus politically undesirable activities (Pigou Reference Pigou1932; Banzhaf Reference Banzhaf2020). A higher tax increases the cost of engaging in the activity, with the dual effects of reducing the production of negative externalities should private actors now find the activity too expensive, and extracting more compensation from those that still engage in the activity and thus continue to derive private benefits from it. A sin tax can be applied within a jurisdiction or at a border between jurisdictions (Wiseman and Ellig Reference Wiseman and Ellig2007). Think of a ‘sin tariff’ as an import tariff that increases the costs to bringing a negative externality-laden good across an international border. A higher sin tariff can reduce the production of domestic negative externalities by making the offending product too costly to import, relative to the counterfactual in which domestic negative externalities are produced by virtue of importing the container. And/or, a higher sin tariff can extract more revenue for government coffers from those commercial actors that continue to derive private benefits from trading the offending product. Such increased tariff revenue can indirectly mitigate negative externalities, for example by improving state capacity or furthering economic development, even if not earmarked for specific trade-related harm mitigation. Perhaps most importantly, the sincerity of the government’s commitment to mitigating ‘sin’ is not at issue. Extracting the tax in itself can have mitigating effects insofar as it changes the incentives faced by those engaged in the trade (Pigou Reference Pigou1932).

A sin tariff has a variety of desirable properties that make it an attractive tool to mitigate the domestic manifestation of foreign-origin negative externalities. Because the tariff is a unilateral action, positive environmental effects can accrue whatever the status of interstate co-ordination and global governance. Tariffs are incremental, so a government can set a tariff low enough to accommodate rather than price out domestic winners from trade. They are easily adjustable, so the government can change its policy in response to changing political and economic conditions. They are also targeted, so the government can make trade-offs on a product-by-product basis (Kim et al. Reference Kim, Liao and Imai2020). Not to be forgotten, a tariff can be useful politically as a tool that at least appears to attach costs to foreign actors, whatever a post hoc tallying of tariff pass-through might reveal (Mansfield and Solodoch Reference Mansfield and Solodoch2024). I return to the question of tariff pass-through in the conclusion.

Product-level tariffs slot into a standard customs infrastructure, whereas domestic environmental policy alternatives can be costly, difficult to implement, and subject to manipulation (Rudra Reference Rudra2008; Perlman Reference Perlman2020; Gulotty Reference Gulotty2020). Think for example of the resources needed to have inspectors open containers, test whether the qualities and percentages of contaminants therein meet regulatory thresholds, and impose penalties for violations. Another policy alternative would be to enforce health and safety regulations ‘behind-the-border’ at importers’ processing facilities. Doing so would not only require significant regulatory capacity, but it would also forego the possibility of addressing foreign-origin pollution separately, when it is still packed in a container at the port, and before what was once foreign becomes physically and politically co-mingled with domestic waste and its management.

For a sin tariff to be useful, a state must be constrained by a trade-off between economic and socio-environmental goals in making its decision over openness to a given product. One can imagine many potentially ‘sinful’ imports: flora and fauna that could become invasive species; weapons with the potential to generate harms for natural and social environments; single-use goods destined for landfills for which there is no secondary demand for recovered raw materials; or goods carrying negative externalities for climate. I hone in on legally traded waste products as exemplars of this class of imports. In the Global South especially, openness to trade in waste products trades off undeniable domestic demand against real environmental harms from limited domestic waste management capacity (Kaza et al. Reference Kaza2018). Further, the negative externalities of imported EOL waste are not inherently transboundary; rather, they are highly localized, often manifesting via literal piles. A sin tariff targeting EOL waste can mitigate the domestic production of socio-environmental harms, irrespective of any impact it might have on environmental outcomes outside the state’s territory.

On the economic side, the waste trade has a potent set of winners in Global South domestic political economies. The actual importers signing contracts and taking possession of containers of waste products are just one set of winners. Securing domestic access via imported waste products is valuable in geographies scarce in raw materials, and deriving raw materials from waste products is not inferior in itself (Gregson and Crang Reference Gregson and Crang2015; Xu et al. Reference Xu, Pan, Sun, Xu, Munyaneza, Croft, Cai and Liu2022). If recovered raw materials are deployed as inputs to exports, the waste trade carries further benefits for accruing foreign exchange. Further, an estimated 20 million ‘waste pickers’ worldwide do the labor-intensive work of sorting and processing waste products and thus have a direct, material stake in the continued import of waste products.Footnote ³ Many if not most waste pickers are informal, extremely poor, and politically marginalized.Footnote ⁴ Nonetheless, waste pickers in the Global South are archetypes of the Heckscher–Ohlin model of trade preferences: low-skilled workers in states abundant in that factor are predicted to be strongly pro-trade, as the kinds of low-skill-intensive goods they produce are competitive on world markets. Consistent with this expectation, transnational social movements representing waste pickers argue for a ‘just transition’ focusing attention on formalizing employment if and when global regulation of the waste trade increases.Footnote ⁵

Several other characteristics of the waste trade also make it a useful setting to observe sin tariffs. First, research on the political economy of trade points us to domestic import-competing interests as a key determinant of trade protection (Kim Reference Kim2017; Kim et al. Reference Kim, Liao and Imai2020). However, as waste products are byproducts, import competition is reasonably a second-order worry for domestic producers in direct competition with imports. Import competition might matter for domestic producers of virgin raw materials. Still, international markets for waste products have arisen as raw material needs outstrip domestic supplies of raw materials, from whatever source (Minter Reference Minter2015; O’Neill Reference O’Neill2019; Goldstein Reference Goldstein2020). We can reasonably infer that what tariffs exist on waste imports require more explanation than a story of direct material losers worried about being out-competed.

Second, global governance around the waste trade is limited. The most successful effort is the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal, with the core function of providing repositories for member state self-reporting on waste shipments. However, while the Basel Convention was signed in 1989 and quickly reached near-universal coverage, the United States is not a member.Footnote ⁶ The Basel Convention facilitates a program of technical work with regard to ‘toxic, poisonous, explosive, corrosive, flammable, ecotoxic, and infectious wastes’, but radioactive waste is excluded. Although twenty-seven African states are party to the 1998 Bamako Convention that bans hazardous (including radioactive) waste imports, there are serious concerns over compliance (Okafor-Yarwood and Adewumi Reference Okafor-Yarwood and Adewumi2020). The UN began negotiating a binding treaty on plastics in 2022, but it failed to conclude negotiations in 2024 as planned; one sticking point is the extent to which the treaty’s goal is to reduce plastic production or increase plastic recycling. In short, Global South states looking to curb the waste trade’s excesses have reason to turn to domestic alternatives.

Indeed, contemporary Global South states have passed over 1,200 domestic non-tariff measures (NTMs) that increase regulation of the waste trade (1996–2020).Footnote ⁷ Yet a third characteristic of the waste trade – that it is a pipeline to access raw materials – suggests it is especially difficult for domestic environmental laws to bite in the Global South. The ‘Environmental Kuznets Curve’ (EKC) posits that richer states past some threshold can afford to forego economic activity in favor of environmental protection, but poorer states are compelled to accept pollution as a correlate of development. EKC mechanisms and causality are in question (Stern Reference Stern2004), though when plotted against GDP per capita waste imports do exhibit the telltale inverted U-shape relationship.Footnote ⁸ EKC constraints on regulatory appetites are likely especially germane around the waste trade: raw materials derived from waste products become direct inputs into construction, industrialization, manufacturing, and other facets of economic development. Despite such limitations, the popularity of waste trade NTMs suggests that Global South states consider these important international environmental policy tools, alongside ongoing global governance efforts. What I point to is an adjustable, incremental, targeted, unilateral, easy-to-implement, potentially revenue-generating option that might be old-fashioned but should not be overlooked.

Garbage Data

What are these waste products that are bought and sold around the world? Table 1 lists the waste products subject to the China garbage shock, which include several ash, residue, and slag products; several yarn and textile waste products made of cotton, wool and animal hair, or artificial fibers; sorted and unsorted rags; unsorted paper; and all post-consumer plastics products. China defined the waste products in Table 1 with Harmonized System (HS) codes, which is the statistical infrastructure maintained by the World Customs Organization’s (WCO) Harmonized Commodity Description and Coding System. HS codes are hierarchical and move from categories (two- and four-digit) to a specific product with a six-digit HS code.Footnote ⁹ In a response to WTO complaints over its actions, China explained, ‘Currently, there is not any globally recognized standard for scrap materials and recyclable materials. China therefore adopts the universally applicable HS code’.Footnote ¹⁰

Table 1.

Waste product imports banned in China’s ‘Operation National Sword’ (2017)

Note: Chinese notification to the WTO, 18 July 2017 (G/TBT/N/CHN/1211).

China is correct: unfortunately, especially in light of its normative salience, the global waste trade is poorly measured (O’Neill Reference O’Neill2019). Thus, it requires a measurement innovation to understand the China import bans in the context of all legally traded waste products. I introduce a list of 179 traded waste products also at the HS six-digit level, documented in HS revisions through 2017, which nearly triples the previously best-available list in the OECD Trade in Waste and Scrap database.Footnote ¹¹ To be classified as a waste product, the definition includes the term waste or scrap;Footnote ¹² it is a residual or byproduct from primary production processes;Footnote ¹³ and/or the product is a one-time primary good intended to be processed into inputs for further use.Footnote ¹⁴ Consistent with industry practice, waste products are categorized into types, based on their origin: animal, chemical, metal, mineral, paper, plastic, textile, or vegetable. Appendix B provides all included HS codes and further examples for the interested reader.

Some waste products are perhaps eyebrow-raising, such as trade in sewage sludge (HS 382520). Why buy that? An importer can acquire foreign-origin sewage, which may be better treated or have more consistent qualities than domestic sewage. The importer can then perform a value-added service to process it into fertilizer. Such on-shoring of labor-intensive and low-technology services can be more profitable to the importer than buying fertilizer itself, not to mention attractive to an exporter in a high-cost jurisdiction. We can expect the exporter and importer to bargain over the price of the waste product, taking this service provision into account. In terms of externalities, trade in sewage is a good example of the ‘not in my backyard’ (NIMBY) benefits of getting post-processing leftovers out of the exporter’s jurisdiction, and ‘yes in my backyard’ (YIMBY) costs of accepting them. What sewage has in common with all other traded waste products is that the importer knowingly, intentionally buys EOL content mixed in with the raw materials of value. Because sewage has an HS code like the other waste products in the dataset, we can track international movements via exports and imports – and, as a consequence, the global redistribution of EOL components.

To be clear, whether an international regulatory body like the WCO provides an HS code for something and therefore is capable of monitoring it is endogenous to politics (Buthe and Mattli Reference Buthe and Mattli2014). Of special importance, e-waste products only received their first dedicated HS codes in 2022 (outside the study period), meaning that what we know about the movement of e-waste around the world has been incredibly limited (Lepawsky Reference Lepawsky2018).Footnote ¹⁵ The multiple oceanic Garbage Patches illustrate that plastic waste has been notoriously poorly accounted for (Lebreton et al. Reference Lebreton2018). Additionally, HS codes do not account for trade in services, so the list of waste products does not include waste exported at a negative price (in which the service of foreign waste disposal is imported). Illegal waste dumping – trade in services at a too-low price – is also outside the scope. Still, it is crucial to advance the research agenda on the political economy of the global waste trade now, starting with the data that states have endogenously chosen to collect.

To probe the sin tariff theory, I compile the product–state–year applied most favored nation (MFN) import tariff for each of these 179 waste products (HS six-digit), for up to 170 Global South states.Footnote ¹⁶ To provide insight into the data, Figure 1 presents heat maps that capture the maximum and minimum tariff for each Global South state–waste product combination during the study period (1996–2020). States are organized alphabetically within region on the y-axes, and waste product HS codes are organized sequentially within type on the x-axes. Colors correspond to a log scale in which the lightest color is equivalent to a 0 per cent tariff and the darkest color indicates a 100 per cent or greater tariff.Footnote ¹⁷ A first takeaway from Figure 1 is that, as implied by the sin tariff theory, Global South states are indeed setting lots of line-item tariffs on waste products. Specifically, there is at least one tariff value reported in 71 per cent of cells. Unfortunately, as tariff data ultimately rely on state reporting, we cannot adjudicate what proportion of missingness is due to the true absence of a product-level tariff (Barari and Kim Reference Barari and Kim2022). However, we can benchmark against the share of tariff lines with specific rates across all traded products. In fact, among the state-years in the sample here, the median tariff line coverage across all products is less than 1 per cent, and even at the 99th percentile coverage is only 35 per cent.Footnote ¹⁸

Figure 1.

Heat maps demonstrating variation in (a) minimum and (b) maximum waste product tariffs (1996–2020).

Second, patterns in Figure 1 are consistent with various observable implications that should hold if and when sin tariffs are an attractive and useful policy tool in the waste trade. Comparing across rows in Figure 1, we see that Global South states’ tariff policies towards waste products are differentiated, reflecting that tariffs are unilateral policy actions that require no co-ordination. Looking within rows, we see that effectively no state has one tariff policy towards waste products, but rather differentiates product-level tariffs as implied by the sin tariff theory. When comparing the same cell in Figures 1(a) and 1(b), we see evidence that states are not just setting and forgetting tariffs on waste products, but are adjusting them to changing conditions, as they should if and when the tariff were a useful tool for adapting to changing economic–environmental trade-offs. Looking down the columns in Figure 1, we see that states’ propensity to set tariffs at different levels varies by waste type. These patterns reflect the reality that types vary in many ways relevant to choices over taxation: processing them requires different combinations of labor and capital; the availability of virgin raw material alternatives differ; and the qualities of and thus harms generated by EOL components differ as well. Still, the significant variation within waste types reinforces that political choices over tariffs are about more than the physical substance in question.

Figure 2 aggregates the granular tariff data to summarize over-time trends, and for comparison it includes the smoothed average tariff for Global South states in the sample. It is well-known that tariff levels have been trending downward; for this Global South sample and period, the average declined from around 10 per cent to around 5 per cent. Descriptively, waste product tariffs have also declined in the period, although not strictly so and at different rates across types. For more descriptive insight into the tariff data, see Appendix E. Understanding effects of the fallout of the 2017 China garbage shock on trends in product-level tariffs is the subject of the next section.

Figure 2.

Waste product tariffs trends, by waste type-year (1996–2020).

China Garbage Shock

The precise timing of China’s ‘Operation National Sword’ waste import bans was a product of issue linkage, serving as one of China’s opening salvos in the United States–China trade war. In response to US criticism, a Chinese spokesperson said, ‘The US officials are so hypocritical as they try to make an issue out of China’s legitimate and lawful actions and accuse China of “seemingly violating WTO obligations” … How could they claim that their restrictions on exports of high-tech and high value-added products to China are legitimate while China’s lawful restrictions on its imports of foreign garbage are illegal?’Footnote ¹⁹ Domestically, China paired the import bans with a massive reorganization of its internal recycling networks to formalize the sector and improve indigenous waste utilization (Goldstein Reference Goldstein2020, 234–36). While domestic reforms might have been foreseeable, not just the timing but also the substance of China’s international trade actions was surprising. The global waste industry thought that China’s tightening of enforcement four years earlier in ‘Operation Green Fence’ had been successful enough to preclude further trade-related regulation anytime soon, and certainly not in the form of outright import bans. Even ex post rationales for why these specific HS codes were targeted are absent from industry discourse. Further, there is anecdotal evidence that even Chinese firms did not fully predict the specific targets of the bans. A publicly acknowledged meeting between Chinese industry representatives and the Chinese state took place in April 2017; reporting at the time suggests that the Chinese waste paper industry was wary of possible future import quotas but not bans, whereas waste plastic importers were sanguine. Only in the aftermath did Chinese paper and plastics recycling firms expand into foreign plants, receiving and processing waste imports abroad so that the products they then shipped into China via intra-firm trade were no longer waste.Footnote ²⁰

While there is much to explore about the consequences of the China garbage shock, I focus on using it to support observable implications of a theory of sin tariffs: Global South states for which China’s 2017 action generated a simultaneous positive shock to competitiveness and negative shock to the environment should turn to higher tariffs, all else equal. The situation lends itself to a difference-in-differences (DiD) estimation of the average treatment effect on the treated (ATET), or the effect on the tariff of developing state-banned product combinations ‘treated’ with trade diversion, compared to the counterfactual in which those developing state-banned product combinations were not treated. For estimates to be interpreted causally, we must be convinced that the shock was exogenous. For DiD to be identified, we must be satisfied with the ‘parallel trends’ assumption: the trends in tariffs for treated and untreated developing state-banned product combinations were parallel before the China garbage shock, and they would have remained parallel if not for the China garbage shock.

I conceptualize the treatment geographically: in commercial markets, exporters were likely to divert banned waste products to importers in China’s neighborhood, especially in an emergency situation when ships at sea suddenly needed new ports of entry. Indeed, a number of careful studies have done the work of tracing trade diversion for banned waste products, confirming that they especially flooded neighboring states (Ma et al. Reference Ma2021; Pacini et al. Reference Pacini, Shi and Sanches-Pereira2021; Tran et al. Reference Tran, Goto and Matsuda2021; Brooks et al. Reference Brooks, Wang and Jambeck2018; Velut and Wellhausen Reference Velut and Wellhausen2026). Therefore, I apply the treatment to combinations of Asia-Pacific developing states and banned waste products. Is it credible to understand the bans as exogenous from the point of view of Asia-Pacific states? Of all states in the world, surely China’s neighbors are motivated to anticipate a shock that would divert foreigners’ garbage from China to their own shores. However, the trade-war timing of the bans was likely unpredictable enough to weaken the ability of even China’s neighbors to anticipate the action. Additionally, the geographic conceptualization of the treatment marks as treated many developing state-banned product combinations that were in fact unlikely destinations for diverted imports, introducing attenuation bias.

We might be concerned that there is heterogeneity in the sample of 179 waste products that complicates the counterfactual. Even if the twenty-six targeted products were plausibly unknown ex ante, it may be generally understood that imports of some of the 179 waste products in the sample would never be banned. On this issue, China offers a research design lifeline: after the initial China garbage shock, China announced its intention to ban imports of an additional set of eighteen waste products either at the end of 2018 or 2019. However, China did not follow through with these bans in the study period (or to date). Interestingly, these announcements were not widely reported; real-time industry analysts cite English translations and HS codes that are marked as ‘for reference only’.Footnote ²¹ Nonetheless, I take the announcements as credible indications that, in a counterfactual world, China might have banned imports of these additional waste products, too. This subsample is thus especially compelling in establishing that policy adjustment given exposure to trade diversion is the mechanism at play.

On parallel trends, Figure 2 shows the secular downward trend in the study period, with average tariffs for some but not all waste types trending similarly. By implication, the China garbage shock may be causing absolute increases due to the treatment and/or smaller downward adjustments for treated versus untreated combinations. In general, tariffs are complicated outcomes, and huge interdisciplinary literatures speak to their determinants. It is reasonable to expect that confounders may pollute the assumption of parallel trends (see Appendix H for visualizations). Therefore, I estimate models both without and with a slate of covariates and fixed effects. These include a product-level control for the size of the product’s world market (USD value of exports + imports, ln). At the state level, I control for factors known to influence propensities towards trade liberalization: regime type, trade per GDP (ln), WTO membership, and unemployment (ln). I also control for GDP per capita and its square, per the ‘Environmental Kuznets Curve’ (EKC) proposition. Several of these controls also account for heterogeneity in endowments of recycling technologies and technical capacity in importing states. I add controls regarding domestic demand for raw materials: industrial output per GDP (ln) and natural resources per GDP (ln). I include state and year fixed effects. Especially important are waste type fixed effects (see again Figure 1), which avoids judgements over which product type is worse – a ranking that is non-obvious and may even be counterproductive (Carson Reference Carson1962). All variables with skewed distributions and containing zeros are transformed to the log of the inverse hyperbolic sine transformation, following best practices (Aihounton and Henningsen Reference Aihounton and Henningsen2021). All time-varying covariates are lagged, and standard errors are clustered by state–product.

Table 2 reports results. Altogether, there is strong support for this application of the sin tariff theory: sin tariffs have shaped the detritus of the China garbage shock. Across specifications, treated state–waste product combinations are setting tariffs from 14 per cent to 22 per cent higher than untreated combinations.

Table 2.

Higher tariffs on imports treated by China garbage shock

Note: Fixed effects (FE) noted in table. Standard errors (SE) clustered by state-product. * p < 0.1, ** p < 0.05, *** p < 0.01. Treatment = Asia-Pacific developing states (Appendix A) and China ban products (Table 1), beginning in 2017. China excluded from all models. Years covered: 1996–2020. Controls as described in text.

As an extension, I consider whether results in Table 2 are robust to taking into account WTO member states’ bound maximum product-level tariffs. For a bound tariff to be set, a state needs to be selected into the WTO, into negotiating a binding for a specific waste product, and into the level of that binding, all of which are non-random (Pelc Reference Pelc2013).Footnote ²² Nonetheless, the expectation is that among state–waste product observations that are selected into bound maximums, treated state–waste product combinations should be more likely to minimize the gap between the tariff and the bound maximum; in jargon, this is called tariff water. I reestimate Models (3) and (4) from Table 2 with tariff water (ln) as the dependent variable, and include the negotiated bound maximum (ln) as an additional control. Table 3 reports results. As expected, the treatment has a negative and significant coefficient across specifications.Footnote ²³ Additionally, results in Tables 2 and 3 are robust to controlling for Basel Convention membership. Results are also robust to controlling for the potentially post-treatment incidence of a national-level non-tariff measure (NTM) regulating the waste trade (Appendix I). The interrelationship between global governance, NTMs, and tariffs in the waste trade and in environmental policy more generally is an important topic for future research.

Table 3.

Less tariff water on imports treated by China garbage shock, given WTO tariff binding

Note: Fixed effects (FE) noted in table. Standard errors (SE) clustered by state–product. * p < 0.1, ** p < 0.05, *** p < 0.01. Treatment = Asia-Pacific developing states (Appendix A) and China ban products (Table 1), beginning in 2017. China excluded from all models. Years covered: 1996–2020. Controls as in Table 2, plus the bound maximum (ln). Estimations performed with xtdidregress in Stata 18 (Donald and Lang Reference Donald and Lang2007).

Qualitative Evidence

Quantitative analyses show robust evidence consistent with the sin tariff theory, in time series cross-sectional data and at scale. To reiterate, the Pigouvian framework establishes that these higher tariffs can generate environmental protection, even if ‘treated’ states are not motivated by the environment at all and simply increase tariffs to redistribute rents from newly competitive industries. Still, an observable implication of the sin tariff theory is that ‘treated’ actors understand that their tariff policies are making environmental–economic trade-offs. Was this the case? On the question of whether people living in ‘treated’ states understood the environmental harm resulting from the China garbage shock, myriad sources make clear that growing piles of foreign-origin garbage have been no secret.Footnote ²⁴ Governments in Asia-Pacific developing states experimented with intricate domestic environmental regulations in the immediate wake of the shock; for example, at times national regulators declared that 100 per cent of containers would be inspected or that further imports would be delayed until inspection backlogs cleared.Footnote ²⁵

For evidence of taxation as an environmental policy, plastic waste diversion in particular triggered discussion throughout the region,Footnote ²⁶ in states such as Indonesia,Footnote ²⁷ Thailand,Footnote ²⁸ Vietnam,Footnote ²⁹ and Taiwan.Footnote ³⁰ In 2019, the Philippines famously sent back to Canada sixty-nine containers, with then-president Duterte announcing, ‘Your garbage is on the way. Prepare a grand reception. Eat it if you want to’ (Liebman Reference Liebman2021). In 2022, the Philippines passed a tax of 100 pesos (USD 1.75) per kilogram of plastic waste, whether imported or domestically produced. At the same time, the Philippines has not (to date) ratified the full set of prohibitions on hazardous plastic and other waste imports available via the Basel Convention, consistent with the Pigouvian logic favoring incentive manipulation rather than outright bans.Footnote ³¹

In Malaysia, the use of sin tariffs on plastic waste products was both explicit and well-documented. Awash in diverted imports just two months after the shock, Malaysia announced a tax of 15 ringgits (USD 3.62) per metric ton of imported waste plastic. The Malaysian Plastic Manufacturers Association complained about the tariff, calling instead to ‘protect the sustainability of the industry’ by cracking down on ‘illegal operators’. It makes sense that domestic importers would prefer a regulatory solution that preserves their cost competitiveness on international markets, with the added benefit of reducing domestic competition. At the same time, a prominent Malaysian NGO complained that ‘the cost and burden to public health and the environment far outweigh the revenue gained by the Malaysian government from the levy imposed on plastic waste imports’. It also makes sense that pro-environment interests would prefer increasing the costs of trade further. In parliament, an opposition MP asked if Malaysia would ban plastic waste imports as China had. The responsible minister demurred and said there were no such plans. In defending the government’s position, the minister cited that ‘the processing of such waste could result in RM 30 billion [USD 7.2 billion] worth of business and the government could not treat the potential lightly’.Footnote ³² What a sin tariff can do is trade off costs to industry against benefits to the environment, of course without fully satisfying either side.

The data suggest that Malaysia used sin tariffs on many China ban imports, at scale. Comparing trade flows from 2014 (three years pre-shock) to 2020 (three years post-shock), Malaysia’s tons of imports of China ban products grew by a factor of 4.5. Tariff revenue on China ban products grew by a factor of 3.9. That tariff revenue did not fully keep up with the volume of imports fits with the Malaysian government’s privileging of importers’ continued competitiveness. Still, Malaysian state coffers benefited. By way of comparison, Malaysian state coffers did not benefit from tariffs on other waste products: over the same period Malaysian imports of other waste products grew by a factor of 1.7, whereas tariff revenue decreased by a factor of 1.4. Because sin tariffs can generate environmental benefits directly, through reduced imports relative to the (unobservable) counterfactual, and/or indirectly, via the consequences of increased tariff revenues, it is difficult to discern their full environmental impact from aggregate data. Nonetheless, Malaysia’s reported direct government expenditure on environmental protection increased by a factor of 1.3 over the same 2014–20 period.Footnote ³³

Political economic theory makes clear that states looking to curb the adverse impact of trade have many options other than autarky. Still, the appeal of mimicking China’s outright bans has led some other states to try the same. For example, Turkey has been inundated with EU waste products as the China garbage shock caused further ripples outside the Asia-Pacific region and the study period (Gundoğdu Reference Gundoğdu2024). In May 2021, Turkey announced a ban on the import of ethylene polymer waste (HS 391510), which went into effect for a week in July and was then overturned. The Turkish plastics recycling association attributed the overturn to the success of its lobbying campaign.Footnote ³⁴ In 2019 India announced plans to ban all plastic waste imports. Not only did India delay for years, but when finally enacted in June 2022 enforceability was immediately in question, as the Indian plastics industry was ‘up in arms’, protesting that ‘thousands of jobs are at stake’.Footnote ³⁵ Even Global South states like Turkey and India have not broken out of the sin tariff theory’s scope condition, that the economic side of trade-related economic–environmental trade-offs is consequential. One implication is that those advocating for bans might remember that incremental sin tariffs can be useful environmental policies, albeit less headline-worthy.