The European Union’s carbon border tax on imports of heavy industrial goods came into effect on January 1, 2026, requiring foreign exporters of products such as steel, aluminium and cement to pay for the carbon emissions linked to their production.
The measure, formally known as the Carbon Border Adjustment Mechanism, is designed to protect European manufacturers who face stricter climate regulations than many of their global competitors. EU officials say the policy aims to ensure fair competition and prevent companies from relocating production to countries with weaker environmental rules.
Under the new system, EU importers must purchase certificates reflecting the carbon emissions embedded in imported goods. The price of the certificates is linked to the EU carbon market and is expected to range between €70 and €100 per tonne of carbon dioxide.
The tax applies to imports of steel, aluminium, cement, fertilisers and other carbon-intensive products. A three-year transition period, which began in 2023, required companies to report emissions data but did not impose financial charges.
The full rollout has drawn criticism from several non-EU countries. The United States has urged the EU to withdraw the measure, arguing it creates trade barriers. China, India, Russia and South Africa have also opposed the policy, with some questioning its compatibility with World Trade Organization rules.
Egypt has requested an exemption from the mechanism and is working on a domestic carbon tax to reduce the impact on its exporters. Local media have reported that Egypt’s iron and steel sector could face a significant share of the overall cost.
Industry representatives have warned that the policy could raise costs for European manufacturers. Aluminium producers, in particular, have said the mechanism may weaken competitiveness if carbon costs are not carefully balanced.
The European Commission has acknowledged the potential impact on industry and has proposed a temporary fund, backed by carbon border tax revenues, to support companies during the transition period. The Commission estimates that the mechanism could generate around €1.5 billion in revenue by 2028.
EU officials maintain that the carbon border tax is intended to encourage cleaner production methods globally and to reinforce the bloc’s climate goals, while preventing carbon leakage from European industries.
