Mooted EU carbon levy on imports gains momentum, sparks concerns over mounting protectionism

MLex Market Insight

A radical plan by the European Union to impose a levy on carbon-intensive imports is increasingly popular among national leaders, although it remains unclear what shape it’s likely to take — a tariff, a tax or an extension of the bloc’s internal Emissions Trading System. Many EU leaders are now of the view that some form of tariff is required to avoid “carbon leaking” — that’s the risk that business will move production to other jurisdictions to sidestep European environmental standards. Yet any EU move to impose a tariff will play out against a backdrop of growing protectionism around the globe, with political uncertainty in the United States contributing to an increasingly difficult trade environment.