The world of international trade is no stranger to change, but a new regulation on the horizon, the Carbon Border Adjustment Mechanism (CBAM), promises to be particularly impactful. This blog post digs into the complexities of CBAM, its implications for global trade, and, crucially, how both trade and tax departments worldwide must prepare for this seismic shift.
What is CBAM?
The European Union’s Carbon Border Adjustment Mechanism (CBAM), set to be fully enforced from January 2026, is designed to address the issue of “carbon leakage” – the relocation of industries to countries with less stringent environmental regulations to avoid emission reduction costs. CBAM wants to make the market fair by setting a price for carbon content of certain goods brought into the EU. This will ensure that imported products have the same carbon pricing as goods made in the EU.
To dig deeper, visit the original article on the Thomson Reuters blog.