The European Union’s carbon border tariff arrives in January. An architect of the plan discusses its impact on trade, competition, and climate.

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On January 1, 2026, the European Union will launch its Carbon Border Adjustment Mechanism (CBAM)—the world’s first carbon tariff on imported goods. Designed to support the EU’s ambitious decarbonization goals, CBAM will impose a carbon fee on imports such as steel, aluminum, and fertilizers, while seeking to ensure the competitiveness of European industries.

In this episode, Mohammed Chahim, the European Parliament’s lead negotiator on the carbon border fee, breaks down how CBAM will work, its role in the EU’s broader climate strategy, and what it means for global trade. He also discusses how the tariff could affect exporters to the EU, including the United States, and how policymakers aim to navigate potential trade disputes.

Dr. Mohammed Chahim is a Dutch member of the European Parliament and its lead negotiator for the EU’s Carbon Border Adjustment Mechanism (CBAM).

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Energy Policy Now is produced by The Kleinman Center for Energy Policy at the University of Pennsylvania. For all things energy policy, visit kleinmanenergy.upenn.edu

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