US Ambassador to the EU, Andrew Puzder’s recent description of the EU’s Carbon Border Adjustment Mechanism (CBAM) as protectionism, has met with annoyance in Brussels.

The European Commission has stated that CBAM is not a tariff as it is designed to be non-discriminatory, compatible with World Trade Organization rules, and applied equally to imports based on their embedded carbon emissions.

The response follows an opinion piece in The Financial Times from Puzder, pointing out that criticism of trade barriers to EU goods by the US is similar. It is unlikely either side will agree, and although the US has been volatile in its application of tariffs, the EU itself has recently been criticised by China for its application of a levy on EV imports, citing its belief that these have an unfair state subsidy.

CBAM was designed as a mechanism to prevent cheaper but more carbon producing industries in external countries undercutting EU producers at the cost of the environment, but it has also been seen as a method to give an advantage to EU industries that are required to comply to environmental standards of the EU (particularly over the Global South) and potentially help grow the EU’s carbon trading markets.

All in all, trade tensions are growing across the Atlantic and elsewhere, and as economic woes grip the globe, will certainly grow.

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