CBAM in Light of the New U.S. Tariff Policy: What Trump’s Measures Mean for Europe’s Climate Border Adjustment Mechanism

A New Era of Tariff Policy

With Donald Trump’s return to the White House, the tone of international trade policy has changed significantly. The U.S. has announced a sweeping tariff package that will take effect in April 2025. It introduces import duties on nearly all goods, with tariff rates largely based on the trade balance with each country. Exports from the European Union are among the hardest hit, facing a flat 20% import duty. Imports from China will be subject to cumulative tariffs of up to 54%. Many emerging and developing countries are also affected: Myanmar, for instance, faces 44%, and Lesotho 50%.

Pragmatic Protectionism

This new system is not based on a finely tuned model, but rather on a blunt principle: “What you do to us, we’ll do back—at half the rate.” While this approach may appeal domestically, in practice it marks a de facto end to multilateral tariff rules. Trump justifies his measures as a means of protecting American industry—and he’s not subtle about it. His references to a “Liberation Day” marking the economic rebirth of the U.S. make his aims clear: autarky, control, and reindustrialization.

Is CBAM a kind of European tariff on CO₂ emissions targeting the U.S.?

Even though Trump hasn’t explicitly addressed CBAM yet, the mechanism is often lumped into the same category. Like tariffs, it involves charges on imports. Like tariffs, it centers around a powerful regulatory actor—the EU. But the similarities end there. CBAM is not a traditional tariff. It’s often compared to VAT, which the EU applies universally—regardless of whether goods are imported or domestically produced. In fact, Trump’s economic rationale also targets the European VAT system, despite its internal logic. But there’s a fundamental difference here: VAT is a consumption tax that is fully refunded upon export—a “destination-based tax.” Tariffs, by contrast, are charges on border crossings and are not refunded. CBAM, for its part, is a climate tool. It equalizes CO₂ pricing and is based on emissions generated during production—regardless of where the production occurs. CBAM, too, is expected to include an export rebate mechanism in the future. Both VAT and CBAM, then, differ substantially from traditional tariffs. Claims of unfair EU treatment toward U.S. businesses are, at best, misinformed.

The Business Challenge

For internationally operating companies, the new U.S. tariff policy represents a significant additional cost burden—especially since many of these new tariffs come on top of existing sanctions and trade defense measures. Meanwhile, CBAM is also increasing import costs in Europe for emissions-intensive goods like steel, aluminum, cement, and fertilizers. Estimates suggest that additional CBAM-related costs could run into several billion euros annually for importers—depending on carbon certificate prices and the scope of future CBAM expansion to other product categories. Companies need to consider both tariffs and CBAM in their strategic planning. As a result, businesses are under dual pressure: they must respond to unilateral tariff measures like Washington’s “tariff hammer,” while also meeting climate-driven regulatory demands from Brussels. This puts many companies in front of strategic crossroads—rethinking supply chain resilience, relocating production geographically, or accelerating decarbonization of value chains.

CBAM as a Framework for Future Levies

At the same time, it’s becoming clear that in a world where trade tools are increasingly used for geopolitical aims, mechanisms like CBAM are essential. They offer a credible, legally compliant, and climate-based alternative to arbitrary punitive tariffs. CBAM could even become a global benchmark—provided it remains transparent, technically robust, and open to international dialogue. The attempt to globalize carbon pricing depends on such reference systems. Conclusion: Global Trade Is Being Reshaped The new U.S. tariff policy marks nothing less than a tectonic shift in the international trade order. CBAM is under close scrutiny—as a potential pioneer of a “climate-driven trade order,” but also as a battleground for long-standing disputes.

Strategic Support

For companies, the time is now—not just to respond to rising costs, but to fundamentally rethink their international strategies. Those who prepare now—regulatorily, climate-wise, and geopolitically—can reduce risks and seize opportunities. Those who wait will be forced to react. We’re happy to support you. Just reach out to us directly at helge@kolum.earth! Best regards, Helge Wieggrefe