On November 1, 2025, the EU Carbon Border Adjustment Mechanism (CBAM), also known as the “carbon tariff,” officially completed its first expansion, incorporating 8 industries including chemicals, plastics, and aluminum into the taxation scope, with tax rates rising in a stepped manner based on the carbon emissions of products. This policy adjustment not only affects the direction of global trade but also promotes countries to accelerate their low-carbon transformation process, significantly enhancing the linkage effect of the global carbon market.
This expansion is an important upgrade of the EU’s carbon tariff policy. Previously, the mechanism only covered 5 industries including steel and cement. According to the new regulations, products within the scope are required to submit full-life-cycle carbon emission certificates. If the carbon cost of imported products is lower than that of EU local enterprises, the difference will be subject to carbon tariffs. In terms of specific tax rates, taking chemical products as an example, products with carbon emissions 10% higher than the EU standard will be subject to a 15% tariff, and products with emissions 50% higher will face a tariff rate of 60%. The European Commission estimates that after the expansion, the coverage of carbon tariffs will account for 12% of the EU’s total imports, bringing approximately 8 billion euros in fiscal revenue to the EU annually.
The implementation of the policy has triggered the restructuring of the global industrial chain. For export-oriented economies, the EU carbon tariff has brought significant cost pressures. As the main supplier of chemicals and aluminum products to the EU, Chinese-related enterprises have begun to respond actively: many aluminum processing enterprises have increased the proportion of clean energy use, raising the share of hydropower-based aluminum production capacity to more than 60%; chemical enterprises have reduced the carbon emissions per unit of products through technological upgrading, and some leading enterprises have achieved ethylene production with carbon emissions lower than the EU standard. Enterprises in emerging economies such as India and Turkey are facing greater challenges, and some small and medium-sized export enterprises have begun to withdraw from the EU market due to their inability to bear the carbon costs.
Governments of various countries have also introduced response measures one after another. The United States announced the launch of a “carbon border tariff reciprocity mechanism,” planning to impose carbon tariffs of the same proportion on steel, automobiles, and other products exported by the EU to the United States to avoid damaging the competitiveness of local enterprises; China has accelerated the construction of the national carbon market, incorporating industries such as chemicals and building materials into the national carbon trading system to promote the alignment of domestic carbon prices with international standards. Currently, the domestic carbon price has risen to 85 yuan per ton, an increase of 20% compared with the beginning of the year. The ten ASEAN countries jointly released the “Low-Carbon Trade Action Plan,” proposing to reduce the overall carbon emissions of the industrial chain through regional cooperation to jointly respond to the impact of the EU carbon tariff.
In the long run, the EU carbon tariff policy is promoting the transformation of global trade towards low-carbonization. Multinational enterprises are accelerating the adjustment of their supply chain layouts, transferring production bases to regions rich in low-carbon energy. Countries with abundant hydropower resources such as Norway and Iceland have attracted a large amount of investment in energy-intensive industries such as aluminum processing and data centers. At the same time, supporting industries such as carbon accounting and carbon finance are developing rapidly. The global carbon consulting market scale is expected to exceed $20 billion in 2026, and the trading activity of carbon derivatives such as carbon futures and carbon options has increased significantly.
However, the implementation of the policy still faces many controversies. Developing countries generally believe that the EU carbon tariff has a “trade protectionism” tendency, which increases the export costs of developing countries and violates the principle of “common but differentiated responsibilities.” The United Nations Conference on Trade and Development (UNCTAD) released a report pointing out that the EU carbon tariff may lead to a 3.5% decline in developing countries’ exports to the EU, exacerbating the global North-South development imbalance. How to balance climate change response and trade fairness in the future will become a core issue in global multilateral trade negotiations.
