Last Tuesday, the European Union (EU) struck a deal to impose a carbon dioxide emissions tariff on imported goods (Reuters). Under the new law, the first of its kind, companies importing goods such as iron, steel, cement, fertilizers, aluminum, and electricity will be required to purchase certificates covering the carbon emissions associated with the goods’ production and transportation (Politico). The tariff is intended to prevent European industries, already required to buy permits for their carbon emissions, from being out-competed by industries abroad selling cheaper goods while following looser emissions rules (Politico). Countries with similarly ambitious emissions rules will be exempt from these new fees when exporting goods to the bloc (N.Y. Times). 

As one of the largest players in international trade, the EU expects this move to spur other countries to strengthen their own emissions regulations (Politico, N.Y. Times). The law has received criticism from some of the EU’s trading partners, including Turkey and China, but EU leaders have defended it as creating emission reduction incentives that international climate conferences were unable to accomplish (N.Y. Times). Part of the EU’s legislative package aimed at dramatically reducing carbon dioxide emissions by 2030, the law is expected to be approved by the end of this year, with implementation beginning next October (Politico, N.Y. Times).