Trade Trends News

Big Trade Data Insights: Attention for EU Exports! Automobiles & Parts, Home Appliances, Garden Tools, etc., Included in Carbon Tariff Scope

     According to the latest draft published by the European Commission on December 17, 2025, the scope of the carbon tariff will be significantly expanded from the current raw materials like steel and aluminum to numerous downstream finished products manufactured using these materials. This includes assembled goods such as automobiles and parts, washing machines, kitchen appliances, and garden tools.

     This means that many manufactured goods exported to the EU in the future will incur additional charges due to the carbon emissions generated during their production process.

What is the EU Carbon Tariff?

     The EU Carbon Tariff, commonly known as the carbon border tax or carbon tariff, is officially titled the EU Carbon Border Adjustment Mechanism (CBAM). It is an innovative trade policy instrument introduced by the EU to address climate change. By imposing additional charges on imported high-carbon products, it ensures these products bear carbon emission costs equivalent to those produced within the EU, thereby eliminating carbon cost differences and promoting green, low-carbon trade.

      The core mechanism of the carbon tariff is as follows: importers (typically trading companies) must declare the carbon dioxide emissions from the production process of imported goods to the EU competent authority. If the emissions exceed European standards, they must purchase "emission certificates" based on the EU's carbon price. The tax standard is based on the carbon price of the EU Emissions Trading System (EU ETS), currently approximately 80-100 euros per ton of CO₂.

     In short, more polluting imported products will incur higher taxes. The higher the carbon emissions, the higher the tax payable.

Which Products Are Affected?

     The draft primarily targets assembled products that are "steel and aluminum intensive" and sets clear material content thresholds:

    •Automobiles and Parts: Aluminum alloy or steel content > 50%, including complete vehicles, car bodies, engine components, etc.

    •Home Appliances: Steel/aluminum casing and component content > 30%, such as washing machines and refrigerators.

  •Kitchen Appliances: Steel/aluminum casing and component content > 30%, such as ovens and microwaves.

  •Garden Tools: Steel/aluminum component content > 20%, such as lawnmowers.

  •Other Steel Derivatives: Screws, bolts, rivets, etc.

How is the Carbon Tariff Calculated?

     The core mechanism is payment for carbon emissions.

     1. Who Declares: EU importers need to declare the "embedded carbon emissions" (i.e., total emissions from the production process) of the products to the authorities.

     2. How it's Calculated: Tax = (Product Carbon Emissions - EU Free Allowance) × EU Carbon Price - Carbon Costs Already Paid in the Country of Origin.

     3.Outcome: Products with higher carbon emissions will incur higher taxes payable.

     Enterprises need to pay close attention to the following implementation steps:

   •October 2023 - End of 2025 (Transitional Period): Only requires reporting of carbon emission data; no payment is necessary.

   •Starting January 1, 2026 (Full Implementation): Must register and begin purchasing carbon emission certificates to complete declaration and payment.

     This expansion aims to close the "carbon leakage" loophole, where companies assemble high-carbon material products outside the EU to avoid costs. Global exporters will be affected, but as a major EU trading partner, relevant Chinese industries (such as mechanical & electrical, home appliances, and auto parts) face direct challenges.