EU Moves to Extend Carbon Tariff to More Manufactured Goods

The new carbon emissions fee will go into full force in January 2026.

A woman looks at washing machines in the Plateau des Couleures shopping area in Valence, France, on July 19, 2025. Nicolas Guyonnet/Hans Lucas/AFP via Getty Images

The European Union is set to expand its so-called carbon border tax to cover a wider range of imported products, from household appliances such as refrigerators and washing machines to automobile parts.

According to plans unveiled on Dec. 16, the EU will add additional steel- and aluminum-based products to the scope of its Carbon Border Adjustment Mechanism (CBAM), which is essentially a tariff levied on selected imported goods based on the greenhouse gases emitted during their production.

The CBAM’s goal is to level the playing field between European manufacturers and competitors in countries that have less aggressive climate change regulations. Adopted in 2023, the mechanism is currently in a transitional phase focused on emissions reporting, but it is scheduled to begin collecting fees from importers in January 2026.

The original framework only requires producers and sellers of steel, aluminum, cement, and fertilizers to pay for the emissions associated with their production. However, the latest proposal from the European Commission would significantly broaden that scope by capturing manufactured goods that rely heavily on those raw materials.

Specifically, the commission has proposed extending the CBAM tax to 180 downstream products that are described as “steel- and aluminum-intensive.” Most of the affected items are industrial components such as metal fittings, wiring, and cylinders, but the list also names some consumer goods, including washing machines and other household appliances.

The decision reflects concerns in Brussels that the original CBAM design could raise costs for EU manufacturers that rely on imported, carbon-taxed raw materials, potentially encouraging them to move their factories to countries with lower environmental standards.

“European industrial producers should be encouraged—and not deterred—in their de-carbonization efforts,” said Stéphane Séjourné, European Commission executive vice president for prosperity and industrial strategy, in a statement.

Once the CBAM enters full force, importers will be required to declare the carbon dioxide emissions embedded in goods produced abroad. If those emissions exceed EU benchmarks, companies must buy emissions certificates priced according to the EU’s carbon market.

The levy is expected to generate about 1.4 billion euros (roughly $1.6 billion) for the EU annually. Brussels has said it intends to allocate 25 percent of CBAM revenues collected over the next two years to support EU manufacturers affected by the policy through a dedicated fund.

The proposal must be approved by the European Parliament and the EU’s member states.

In 2024, the EU imported more aluminum and related products than it exported, resulting in a trade deficit of approximately 11.1 billion euros (about $13 billion). The bloc’s largest aluminum suppliers that year were Norway, China, Iceland, Turkey, and Switzerland, according to Eurostat.

By contrast, the EU recorded a trade surplus of 4.7 billion euros (about $5.5 billion) in iron and steel in 2024. The top destinations for EU exports of iron and steel products in 2024 were the United States, the UK, Switzerland, Norway, and China, Eurostat data show.