The EU carbon border adjustment mechanism aims to boost European manufacturers against non-EU competitors by putting a price on carbon emissions. China has already threatened retaliation, with more likely to follow. The move is seen as protectionist and may affect major exporters like China and India.

The carbon border adjustment mechanism targets industries like steel and cement, where EU producers struggle to compete with cheaper imports from countries like China. The mechanism places a price on emissions during production, potentially impacting exporters and prompting shifts in production methods to meet EU standards.

China and India have expressed dissatisfaction with the EU’s carbon border adjustment mechanism, calling it unfair and discriminatory. China, with its own carbon market since 2021, sees the move as a threat to its competitiveness. India, a major steel exporter to the EU, may see reduced exports due to emission standards.

Concerns have been raised about the accuracy of emissions values used in the carbon border adjustment mechanism, potentially allowing high-emission imports to enter the EU with insufficient carbon costs. This could undermine the effectiveness of the mechanism and lead to unintended consequences for industries and trade partners.

Indian steel exports to the EU are expected to decline due to emission standards incompatible with current production methods. The switch to cleaner production processes would require time and investment, impacting the competitiveness of Indian steel producers in the European market.

The carbon border adjustment mechanism is set to impact global trade dynamics, with major exporters like China and India facing challenges in meeting EU emission standards. The move is seen as protectionist and may lead to changes in production methods and reduced exports to the EU market.

Read more at Yahoo Finance: EU’s Carbon Border Tax Goes Live and Trade Partners Are Not Amused