Canada and EU move toward easing carbon border levy on Canadian exports
PM Carney says progress is being made to address the EU carbon tariff that threatens $2.8 billion of Canadian metal and cement shipments.
At the closing news conference of the Canada‑EU summit in Montreal, Prime Minister Mark Carney announced that Ottawa has reached "common solutions" to the European Union’s carbon border adjustment mechanism (CBAM) that currently applies a levy to Canadian iron ore, steel, aluminium, cement and other carbon‑intensive goods.
"there are \"common solutions\" to resolving the carbon import levy on Canadian products such as iron ore, steel, aluminum, cement and other goods," said Prime Minister Carney.
EU Commission President Ursula von der Leyen praised the answer, saying she "couldn’t have answered it better" on what she called "trade irritants." The CBAM is being applied at a low level now and is scheduled to reach full implementation in 2034, with the aim of encouraging global exporters to lower emissions.
Exposure and compliance costs
A Global Affairs internal memo obtained by CBC estimates that $2.8 billion worth of Canadian goods are exposed to the levy each year, based on averages from 2021‑2024. The memo notes the figure could rise as firms seek new markets to avoid U.S. tariffs. Exporters will have to assess, report and verify the embodied carbon in their products to claim any credit for Canada’s national carbon price.
Diplomatic talks
Canada’s ambassador to the EU, Jonathan Wilkinson, told CBC’s Power & Politics that diplomatic talks are "heading in the right direction but not resolved." He said the EU does not yet recognise that Canadian producers pay an industrial carbon price, but added, "We made enormous progress addressing those issues," and "They will recognize our carbon price."
"Effectively, it needs to be in place by, I think, September or October of 2027. So there's some time," Wilkinson said.