Archive · 10 Oct 2026
US Probe Into EU Carbon Border Tax Could Open India Concessions
The European Union has a rule that makes some imported goods pay for pollution linked to their production.
The United States is investigating how the rule works and has asked small businesses to send comments by November 9.
The US is concerned about how emissions are estimated and checked.
This investigation does not mean that the EU will change its rule or that the US will impose new trade measures.
India also sells steel, iron and aluminium to Europe, and those goods could face added costs.
A clause in India’s trade deal with the EU might let Indian exporters ask for similar relief if the EU gives the US more flexibility.
That relief is not guaranteed and would depend on what the US and EU agree.
Many Indian steelmakers use a higher-emission production method, while scrap that could support lower-emission production is limited.
The USTR opened an investigation into the EU’s Carbon Border Adjustment Mechanism and invited comments from US small businesses until November 9.
CBAM covers imports in six sectors and seeks to align their carbon costs with those paid by EU producers.
The USTR objects to the EU’s default emissions calculations, mark-ups and third-party verification requirements; the investigation does not itself mean new US measures or EU changes will follow.
India’s forward MFN clause could let its exporters seek comparable CBAM concessions if the EU grants flexibility to the United States, but relief is not automatic.
GTRI estimates a 20–35% tax on selected EU imports; India’s emissions-intensive steelmaking and limited scrap supply could make adjustment difficult.
- Who
- The United States Trade Representative, the European Union, and potentially affected Indian exporters.
- What
- The USTR is investigating the EU’s CBAM; India may be able to seek comparable concessions under a forward MFN clause.
- When
- The investigation began this week; US small businesses may comment until November 9. CBAM took effect in January 2026, according to one article.
- Where
- The measure concerns imports into the European Union and trade involving the United States and India.
- Why
- The USTR is examining CBAM’s emissions calculations and compliance requirements, while India’s exporters could face costs under the mechanism.
USTR concerns
EU’s stated rationale
Default emissions values
USTR concerns
The USTR objects that the EU adds a mark-up to default emissions values, which it says raises the overall figures and encourages companies to provide their own data.
EU’s stated rationale
The EU uses country- and sector-level production and energy data to estimate emissions when company-level figures are not provided, as part of a mechanism intended to align carbon costs on imports and EU production.
Verification and business burden
USTR concerns
The USTR has raised concerns about the requirements for EU-accredited third-party verification of company-level data and the treatment of US small and medium-sized businesses.
EU’s stated rationale
The EU has committed to work on additional implementation flexibilities for US small and medium-sized businesses, alongside an increase in the de minimis exception.
Steel scrap restrictions
USTR concerns
Indian industry says EU restrictions on steel scrap exports, alongside CBAM, act as non-tariff barriers and worsen access to a key input.
EU’s stated rationale
The articles do not provide an EU response to this specific Indian industry criticism.
- Covered sectors
- Iron and steel, aluminium, cement, electricity, fertilisers and hydrogen.
- Comment deadline
- November 9 for comments from US small businesses.
- Potential Indian concession
- India’s forward MFN clause could enable a request for comparable treatment if the EU grants concessions to the US; it does not provide automatic exemption.
- Estimated import tax
- GTRI estimates 20–35% on selected imports into the EU.
- Steel production routes
- The articles describe BF–BOF as generally more emissions-intensive than gas-based DRI, with scrap-based EAF typically lowest among the listed routes.
- Indian steel feedstock
- Scrap accounts for 20% of India’s steelmaking feedstock, with domestic availability of about 25 million metric tonnes annually, according to ICRIER.
- Status of US inquiry
- The investigation and consultation are preliminary and do not themselves establish that CBAM will change or that the US will impose trade measures.
