The Significance of CBAM in the Shadow of Global Trade Conflict

A New Tariff Conflict Escalates

International trade policy is currently experiencing a new wave of protectionist measures. Donald Trump, after returning to the White House, has announced a comprehensive tariff package set to take effect in April 2025. After some political delays, the current plan includes a 90-day phase-in period with blanket import tariffs of at least ten percent on nearly all goods entering the United States. The situation is entirely different for goods imported from China. According to the current – admittedly constantly changing – information, additional duties of 145 percent will apply to these imports. China has already responded with counter-tariffs. It has imposed a 125 percent duty on imports from the U.S. This measure will likely restrict the competitiveness of American goods in China so severely that they will barely gain any market share. According to the Chinese government, no further response to additional U.S. tariff increases is planned. Many companies now feel compelled to react to these developments. Apple recently announced it would further shift iPhone production from China to India. Such decisions are indicators that international supply chains are being reorganized – not just for efficiency reasons, but as a response to political volatility and rising costs.

CBAM as a Second Cost Driver in Foreign Trade

In addition to U.S. tariff policy, European companies must also prepare for rising costs due to CBAM. Starting in 2026, the CO₂ border adjustment will lead to significant extra costs for imports, likely first payable in 2027. Unlike tariffs, which apply across the board, CBAM is calculated based on the specific emissions generated during a product’s manufacturing process. This ensures transparency – but also results in noticeable cost increases in procurement. For steel imports, CBAM could lead to additional costs of around 380 euros per ton in the medium term – roughly a 60 percent increase based on current market values. For aluminum, the absolute burden is even greater: up to 570 euros in CO₂ costs per ton could soon be imposed on importers. Compared to a typical market price of around 2,300 euros, this results in a price increase of nearly 25 percent – not including transport or processing costs.

CBAM Under Pressure: The U.S. Government Sees It as a Tariff – and Threatens Countermeasures

The U.S. government may soon officially classify CBAM as a tariff measure. The U.S. Trade Representative recently stated on X (formerly Twitter) that CBAM imposes “costly verification measures” and reduces the competitive edge of American exporters compared to “high-emission competitors, namely China.” Estimates suggest that CBAM will affect U.S. exports worth 4.7 billion U.S. dollars annually. In Washington, CBAM is being framed as “undermine fair competition” – a narrative that could pave the way for countermeasures. If the U.S. government officially designates CBAM as a trade barrier, new tariffs on European goods may follow – with unpredictable consequences for many sectors.

CBAM and Tariffs – Two Costs, One Strategic Risk

The simultaneous rise of tariffs and CBAM costs makes clear strategic analysis essential. For many companies, this means they must plan for real price increases of 25 to 60 percent on key inputs like steel, aluminum, or fertilizers. And they must integrate this development into their supply chain structures, site selection, and pricing strategies. Despite its cost structure, CBAM offers a key advantage: it is predictable. Unlike politically motivated tariffs, it is governed by a technical regulatory framework. CO₂ prices are tied to the EU Emissions Trading System, the calculation basis is standardized, and investing in low-emission suppliers can yield real cost advantages.

Production, Procurement, Location – CBAM Forces Rethinking

The combined impact of CBAM and new tariffs demonstrates how deeply intertwined business and climate policy have become. Companies that don’t know their CO₂ costs risk making strategic miscalculations. It's no longer just about regulatory compliance – but about competitiveness. Those who know the CO₂ intensity of their inputs can respond to CBAM. Those who choose their product origins strategically can manage tariff risks. Those who combine both approaches are better positioned – against both climate-related and geopolitical pricing risks.

Conclusion: Trade Costs Become a Central Control Factor

Current developments show: trade costs are no longer a side issue but an integral part of strategic business management. CBAM will establish itself as a permanent factor in the coming years. The question is not whether – but how – companies manage their CO₂ costs. Combined with unpredictable tariff measures, this becomes a matter of survival for many internationally active business models.

Support with Cost Analysis and Strategic Alignment

We’re happy to support you in analyzing the financial impact of CBAM and international tariffs on your supply chain and in making the right strategic decisions. From identifying CO₂-intensive inputs to developing low-emission alternatives – feel free to contact us directly at helge@kolum.earth.