A number of countries are considering, mainly as part of their obligations under current treaties, domestic actions to internalize the social cost of pollution. One of the major ob- stacles, however, in those countries is the fear of jeopardizing their competitive position in world markets. A policy that has been repeatedly proposed to deal with this challenge is a tariff mitigating any distortions arising from cross-country differences in environmental pol- icy. Such unilateral actions are the focus of this paper. It is argued that if a country set its pollution taxes optimally, cooperatively or non-cooperatively, there exist unilateral tariff reforms that improve global welfare