International trade laws can now tax products based on their embedded carbon emissions
The European Union's Carbon Border Adjustment Mechanism (CBAM) imposes a 'climate tariff' on imports to equalize global trade costs and prevent carbon leakage from regions with lax environmental regulations.
European trade law now enforces planetary thermodynamics by taxing imports based on the CO2 emitted during their production. Starting in April 2026, the Carbon Border Adjustment Mechanism (CBAM) will apply a levy of approximately €85 per ton of carbon on high-emission goods like steel, cement, and aluminum. For a Chinese steel slab, which typically requires 1.8 tons of CO2 per ton of finished product, this translates to a 25% tariff, whereas green EU steel produced with lower emissions faces only a 5% equivalent burden.
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