The China Iron and Steel Association (CISA) has stated that the EU’s Carbon Border Adjustment Mechanism (CBAM) creates concerns regarding a new barrier for the country’s exports by increasing costs by 4-6 percent, according to a report by Reuters. The transitional phase began in October and the mechanism will be fully in force with a carbon tax in 2026.
Stating that once other countries impose similar protection measures, it will result in higher trading costs and mounting risks of trade friction, CISA added that it calls on the EU for more talks to address climate issues.
CISA hopes the EU could consider cost and operational challenges posed to its downstream steel consumers due to the change in import structure and engage in more communication with all relevant parties to address climate challenges together.
In addition, according to Scotland-based energy research and consultancy company Wood Mackenzie, the CBAM is likely to significantly raise the costs of steel imports not only from China but also from India, which is currently assessing local tax options to avoid the EU’s carbon tax.