Prime Minister Mark Carney’s debated carbon tariffs are in flux after European lawmakers eliminated 90% of importers from its Carbon Border Adjustment Mechanism (CBAM).

A CBAM, or a tariff on imported goods based on their manufacturing emissions, will still be implemented for 2026, adding another layer of complexity in trade disputes with the United States.

The new 50-tonne threshold for the EU's carbon tariffs will exempt 182,000 importers, yet still cover 99% of emissions from iron, steel, aluminum, and cement imports. 

The debate on carbon tariffs is part of the EU's trade dispute with the U.S. and China, risking Canadian exporters as collateral.

Once finalized, a draft US-EU agreement would exempt U.S. products for one year from tariffs on goods (e.g., steel, cement, fertilizers) at high risk of "carbon leakage."

Effective June 27, Prime Minister Carney imposed 50% tariffs on steel imports over 2.6 million tons from non-free trade partners to bolster Canada’s steel industry against U.S. tariffs.

Carney also discussed carbon tariffs to “ensure imported goods face the same carbon costs as domestically produced goods," vowing to keep Canadian companies competitive.

"We're going to develop a carbon border-adjustment mechanism," Carney said January 31. "What that does is it promotes jobs here at home, it prevents carbon leakage abroad, and it aligns Canada with our allies who are still engaged in the fight against climate change."

Prime Minister Mark Carney and EU allies shared a “carbon” vision at the latest EU Summit. “Carbon is trade,” Carney said June 23 in Brussels. 

The remarks align with a shared desire to integrate ‘climate change’ policies into trade, following questions on the EU CBAM.

European Parliament overwhelmingly approved (564-20) changes to the CBAM to only include iron, steel, aluminum, and cement imports. "We're doing this specifically for those companies at the risk of losing out because they are exporting," EU climate commissioner Wopke Hoekstra told reporters.

The EU started gathering emissions data for its CBAM in 2023 and will begin collecting carbon tariffs in 2026. Hoekstra expects to generate €2.1 billion in revenues by 2030.

Stéphane Dion, the Special Envoy to the European Union, backed carbon tariffs in June 2024 as sound economic and climate policy. 

“Given that Canada already has a serious carbon pricing system, Canadian companies may not incur the EU carbon adjustment when it is implemented. This would give our companies an advantage over competitors who do not have carbon pricing systems comparable to the EU,” Dion said at the time.

Meaning, the EU CBAM equalizes carbon prices between EU products (under Emissions Trading Systems) and imports by requiring importers to purchase carbon credits to cover the difference.

Days after scrapping the consumer carbon tax in March, Prime Minister Carney visited Europe to defend the industrial carbon tax, vowing to maintain the levy (OBPS) as part of the Liberal Party's platform for industrial polluters.

The EU's carbon border tariff would not apply to imports from countries with similar carbon pricing.

“It's in the interest of our companies and our fellow citizens to know this, while they don't know it today,” Dion said.

A Conservative Party spokesperson told CBC News that a "carbon tax at the border guarantees prices for gas, heating and groceries [will] go up and lines at food banks [will] increase."

Rebel News attempted to reach the Prime Minister’s Office for clarification on a Canadian CBAM but did not receive comment at publication.

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