The China Iron and Steel Association (CISA) has voiced concerns over the European Union’s Carbon Border Adjustment Mechanism (CBAM), labeling it a new trade barrier against Chinese exports. This announcement was made following the EU’s decision in April to target imports of steel, cement, aluminium, fertilisers, electricity, and hydrogen with a levy to combat high carbon emissions. The levy, which is expected to affect China’s steel industry, the largest exporter of steel globally, will begin reporting requirements in October with full enforcement starting in 2026.
“The EU’s unilateral establishment of CBAM is in essence a new trade barrier created under the auspice of low carbon,” stated the CISA.
This statement was part of a response to a Reuters inquiry made before the initial phase of the CBAM. The steel association has underscored the need for more discussions with the EU to collaboratively tackle climate issues, highlighting the principle of “common but differentiated responsibilities” and suggesting the EU’s plan does not account for different stages of economic development.
“Once other countries take reciprocal and similar trade protection measures to safeguard their interests, it will result in higher trading costs and mounting risks of trade friction,” the CISA remarked.
The CISA has also expressed a desire for the EU to consider the financial and operational impacts on downstream steel consumers and to engage in broader communication to jointly address the challenges posed by climate change.
“We hope the EU could carefully 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,” added CISA.
Additionally, the association’s vice chairman, Jiang Wei, informed reporters that the scheme could potentially escalate China’s export costs for steel products by 4% to 6%. Independent consultancy Wood Mackenzie echoes this sentiment, predicting significant cost increases for steel imports into the EU, particularly from China and India. In response, India is considering domestic tax adjustments to counteract the EU’s carbon levy and has revealed plans to present a formal complaint to the World Trade Organization.