Brussels defends CBAM after US ambassador's protectionism claim

The European Commission has rejected US Ambassador to the EU, Andrew Puzder's labeling of its Carbon Border Adjustment Mechanism as protectionism, insisting the measure is a climate tool designed to prevent carbon leakage rather than a disguised tariff.

A commission spokesperson said Aug. 13 that CBAM differs fundamentally from traditional tariffs because it applies equally to all countries based on verified embedded emissions and imposes low or zero obligations on low-carbon goods.

"The commission does not share the characterization of CBAM as a tariff," the spokesperson told Platts, part of S&P Global Energy, Aug. 13. "It is non-discriminatory, WTO-compatible, and applies equally to all third countries based on verified embedded emissions, irrespective of origin."

The response follows Puzder's Aug. 12 opinion piece in The Financial Times, in which he argued CBAM mirrors the trade barriers Brussels criticizes in US measures.

"We therefore do not agree with comparisons with unilateral tariff measures," the spokesperson said.

Climate measure defense

The commission emphasized that CBAM ensures imported goods face the same carbon price as EU producers under the EU emissions trading system, supporting global decarbonization efforts. Crucially, any carbon price already paid in a third country for embedded emissions can be deducted from the CBAM obligation, preventing double payment for the same emissions.

These remarks highlight growing transatlantic tensions over industrial trade policy even as an EU-US tariff deal entered into force on July 1, making permanent a temporary 15% US import duty on most EU goods.

"Protesting against US national security measures while erecting protectionist barriers reveals a striking double standard," Puzder had said. "CBAM differs in form but not in substance."

The definitive phase of CBAM began Jan. 1, 2026, following a transitional reporting period. The mechanism targets imports of goods from the iron and steel, aluminum, cement, hydrogen, fertilizers and electricity sectors, aiming to prevent carbon leakage where companies relocate production to regions with weaker climate policies.

The EU's CBAM aims to prevent carbon leakage by ensuring imported goods face similar carbon costs to those produced within the EU, potentially affecting trade flows of carbon-intensive products.

Trade tensions

Puzder had drawn direct parallels between CBAM and America's Section 232 tariffs on steel, aluminum and copper derivatives, calling both measures protectionist despite different framing. His comments highlight escalating transatlantic trade tensions as an EU-US tariff deal that entered force July 1 made permanent a 15% US import duty on most EU goods.

Many developing countries have criticized carbon border taxes in recent years. Russia launched a formal WTO dispute against CBAM and the EU ETS in 2025, calling them "discriminatory."

China has raised concerns within the WTO but filed no official complaint. BRICS leaders have repeatedly condemned unilateral climate-linked trade measures as discriminatory protectionism. The EU maintains CBAM complies with WTO rules by creating a level playing field without creating trade barriers.

Carbon prices vary significantly because different regions use independent compliance systems, caps and political frameworks with little global alignment.

Carbon permits in Europe are currently almost three times more expensive than compliance prices in parts of the US.

Platts assessed EU Allowances for December 2026 at €81.91/metric ton of carbon dioxide equivalent ($94.49/mtCO₂e) on Aug. 12. This compares with the California Carbon Allowance price for December 2026, which was valued at $33.42/mtCO₂e on Aug. 12, Platts data showed.