Coal Trade Equalization Act of 1985

Coal Trade Equalization Act of 1985 - Directs the Secretary of the Interior to investigate and report to the Congress on the relationship between coal imports and: (1) the management of the Federal coal leasing program; and (2) the economic condition of the U.S. coal industry. Directs the Secretary of the Interior to include in such report appropriate legislative recommendations if the Secretary of the Interior finds that coal imports are adversely affecting the management of the Federal coal leasing program and the economic condition of one or more sectors of the U.S. coal industry.

Amends the Tariff Schedules of the United States to grant duty-free treatment to coal from any country that has historically imported more coal from the United States than it has exported to the United States. Imposes a duty on coal from other countries. Requires the President to adjust the duty in accordance with findings made by the Secretary of Commerce (the Secretary). Requires the Secretary, upon receipt of a petition by an interested party, to determine the environmental, health, welfare, and safety cost for producing coal in a foreign country and in the United States. Requires the President to: (1) increase the duty if the U.S. cost exceeds the foreign country's cost; or (2) decrease the duty if the foreign country's cost exceeds the U.S. cost.

Amends the Trade Act of 1974 to add coal subject to such duty to the list of articles which cannot be designated as eligible articles for the Generalized System of Tariff Preferences.