The origin of imports differs greatly between industries. The majority of U.S. imports of steel, aluminum, and paper come from other industrialized countries, those listed in Annex I of the UN Framework Convention on Climate Change.

With the exception of the United States, all Annex I countries have accepted mandatory emissions reduction targets as part of the Kyoto Protocol. As such, these countries would likely pass a “comparability test” exempting them from allowance requirements under U.S. cap-and-trade legislation. Under a carbon tax regime with a border tax adjustment, some Annex I countries may seek a tax credit arguing their products are less carbon-intensive than those manufactured in the United States.