The EU’s Carbon Border Adjustment Mechanism

Abstract

The European Union’s new tariffs against certain goods manufactured in countries without carbon-pricing schemes – a cornerstone policy of the ambitious European Green Deal – has attracted diverse opposition, including from China, Russia and the United States. Environmental considerations aside, the Carbon Border Adjustment Mechanism, as the policy is known, will inject another divisive trade dispute into a global trade system already reeling from trade wars, protectionism and systematic dysfunction.