Can the EU withstand the pushback against its carbon levy?

THE European Union’s Carbon Border Adjustment Mechanism (CBAM), which entered into force on Jan 1, has sparked widespread international controversy. While critique of the carbon tariff framework extends across the industrialised world, including the US, tensions are most prominent with emerging markets.

China has criticised CBAM as unfair, discriminatory and incompatible with World Trade Organization rules. Beijing argues the EU’s default emissions values overestimate the carbon intensity of Chinese products and disregard progress made in green and low-carbon production.

China also condemned the EU’s recent decision to extend CBAM to around 180 additional downstream steel and aluminium products, calling it unilateral trade protectionism.