US Tariffs on Steel and Aluminum – What Europe Can Learn for CBAM
CBAM Weekly – Issue 58
New Tariffs in the US
This week, the US government sent a strong signal to global trade. A 50 percent tariff now applies to 407 categories of steel and aluminum products. Affected are not only traditional industrial goods such as steel coils but also many processed items: motorcycles, window and door frames, sports equipment, crane vehicles, and even railway wagons. And the list may grow longer – an extension to an additional sixty product groups is currently under review.
How the new measures work
What is new about this round of tariffs is the way they are calculated. While previous tariffs applied uniformly to entire sectors, the current surcharge is based on the actual metal content in each product. The more steel or aluminum it contains, the higher the tariff. Who will be responsible for performing the exact calculations is officially still unclear. In practice, however, this responsibility will almost certainly fall on importers. For companies, this means more bureaucracy, more uncertainty, and significant additional costs. For complex goods with many components in particular, determining material content becomes a real challenge. The goal of the measure is to close loopholes. Until now, companies could avoid tariffs by relying more on finished goods from abroad rather than raw materials. With the new logic, that strategy becomes far less attractive.
Parallels to CBAM
Even if the US motivation is primarily protectionist, there are lessons to be learned for CBAM. In Europe, the question is how the Carbon Border Adjustment Mechanism can be extended from basic materials such as steel and aluminum to downstream products. What is clear so far: starting in 2026, CBAM costs will mainly apply to imported basic materials. But what about products that contain these materials-such as cars, machinery, or household appliances?
US Tariffs as a Model
The US example offers an interesting perspective. The European Commission is also working on ways to prevent circumvention of CBAM and the shifting of production for finished goods abroad. For this reason, it is developing a proposal to extend the scope to additional end products and increasingly to consumer goods. Here, too, the American approach could serve as a model. Instead of flat surcharges, levies are linked to the specific content within the product. In the US, it is the metal content; for CBAM, it would be the embedded emissions or the share of CBAM-covered basic materials. The advantage is obvious: the system becomes more precise and better reflects the actual burden. The downside: complexity increases significantly. Companies would have to provide even more detailed data, which not only drives up costs but also raises the risk of disputes with authorities. Who is responsible for calculations? Which methodology is considered correct? These are the kinds of questions that will dominate going forward.
Outlook for CBAM
The US tariffs make it very clear where the development is heading: border measures are evolving from blunt flat-rate rules to data-driven systems more closely tied to the actual properties of a product. For CBAM, this will be especially important if the EU extends the scope to downstream products. Only if emissions can be clearly and transparently allocated along complex supply chains will CBAM remain credible and effective. At the same time, regulation must not become so complex that it overwhelms companies in practice. The balance between accuracy and practicability will therefore determine the success of the next CBAM phase.
Support with implementation
If you would like to know how your company can strategically prepare for a potential CBAM extension, please feel free to reach out to me directly (helge@kolum.earth). Together, we can develop an approach that ensures regulatory compliance while safeguarding your competitiveness.