Five Things to Know About How China Is Bracing for the EU’s ‘Carbon Tariff’

The European Union’s Carbon Border Adjustment Mechanism (CBAM), dubbed a “carbon tariff,” took effect on Jan. 1.

CBAM requires importers of certain goods that generate a lot of carbon dioxide when produced, such as steel, aluminum, cement and fertilizers, to purchase certificates reflecting those emissions. In effect, the mechanism forces foreign producers to pay the difference between the carbon price in their home country and that in the EU.