Washington calls its steel and aluminum tariffs a national security necessity. Brussels calls its carbon border charge a climate safeguard. The numbers behind both mechanisms tell a less symmetrical story than either side’s talking points suggest.
Since June 2025, the United States has charged a flat 50 percent duty on most primary steel and aluminum entering the country under Section 232 of the Trade Expansion Act of 1962. Since January 2026, EU importers of the same two metals have operated under the financially binding phase of the bloc’s Carbon Border Adjustment Mechanism, facing certificate charges now benchmarked at just over €75 per tonne of embedded CO2. Washington calls its charge a matter of national security. Brussels calls its charge a matter of climate accounting. Each government has spent much of the past year accusing the other of using that label to shield a domestic metals industry losing ground to cheaper imports, and each has some basis for the accusation.
That comparison has become central to the unresolved steel and aluminum portion of the EU-US trade framework struck at Turnberry in July 2025. But the shared rhetoric of protecting national producers obscures how differently the two mechanisms are actually built: what each costs today, how quickly each can change, and how much legal exposure each government has accepted to defend it.
Section 232’s fast-moving math
The current fight did not start with the original 2018 tariffs, 25 percent on steel and 10 percent on aluminum. It accelerated through 2025. Washington raised both rates to 50 percent in June and added copper at the same rate in August. That same month, the Commerce Department’s first formal product review swept more than 400 additional categories, mostly machinery, fasteners, and fabricated components, into the definition of a taxable steel or aluminum “derivative.” The expansion landed within days of the EU-US Framework announced on August 21, 2025, which set a 15 percent tariff ceiling on most European exports to the US but explicitly excluded steel, aluminum, and their derivatives, leaving them at the higher rate while both governments pledged only to consider cooperating on tariff-rate quotas.
Washington has revised the system twice more since. An April 2026 proclamation shifted the tax base from metal content to a product’s full customs value, introducing tiers of 50 percent for primary metal articles, 25 percent for most derivatives, and 10 to 15 percent for goods with heavy US-sourced content or in specific relief categories. It scrapped the formal process for petitioning to add new products, even as it removed a number of items from the derivatives list. A June 2026 update widened the 15 percent relief tier to cover agricultural equipment, HVAC systems, and more industrial machinery, while simultaneously adding new items, including steel racks and aluminum lithographic plates, back onto the list.
Brussels does not read this sequence as good-faith easing. France and Germany reportedly concluded that the April changes worsened terms for roughly half the affected product categories, even as the overall structure simplified. The European Parliament and Council have since written their own leverage into the implementing legislation for the trade deal: if US tariffs on steel and aluminum derivatives remain above 15 percent past December 31, 2026, the European Commission gains the legal authority to suspend the preferences it has extended to American exporters in the same categories. That threat targets the derivatives list specifically. The 50 percent primary metal rate was never part of the 15 percent ceiling to begin with, a distinction that gets lost when the dispute is described simply as the US “breaching” an agreement.
CBAM’s slower, smaller bite
CBAM entered its financially binding phase on January 1, 2026, after three years of reporting-only obligations. The European Commission calculated and published the first certificate price, €75.36 per tonne of CO2, on April 7, based on the average auction price of EU carbon allowances over the prior quarter; the second-quarter figure came in at €75.28. A new 50-tonne annual exemption threshold removes roughly 182,000 mostly small importers from the system entirely, though the Commission estimates that it still leaves more than 99 percent of covered emissions inside it.
What the certificate price does not convey is how little of it currently applies. Because the EU still issues free emissions allowances to its own steel and aluminum producers, CBAM’s 2026 adjustment factor covers just 2.5 percent of a shipment’s embedded emissions, a share that rises annually as those free allocations phase out through 2034. A tonne of steel carrying 2 tonnes of embedded CO2 faces a certificate liability of roughly €3.77 this year at the first-quarter price, not the roughly €151 a fully phased-in charge would eventually imply. Importers cannot even purchase certificates until February 2027, with the first surrender deadline following that in September, for 2026 imports. Even judged purely as climate policy, CBAM’s marginal value is debated: modeling cited in sustainability-finance research attributes roughly 21 percentage points of emissions reduction to the EU’s carbon price itself, with the border mechanism adding only about 1.3 percentage points on top of that.
The Commission has proposed extending CBAM to roughly 180 downstream products, car parts, household appliances, and construction and machinery components with heavy steel or aluminum content, starting in January 2028, and the Council’s negotiating position would go even further than that original list. But the proposal is still moving through the EU’s ordinary legislative process. Parliament is not expected to adopt its position until around September 2026, with formal adoption targeted for 2027. The Commission’s own impact assessment for that extension names China (an estimated €4 billion of exposed imports), the UK, and Japan (roughly €2 billion each) as the most affected economies. The United States, a comparatively minor supplier of raw steel and aluminum to the EU, is not named among the most exposed economies in that assessment, which says something about how much of this specific dispute is about US-origin metal versus the principle at stake.
Where the comparison holds, and where it breaks down
The similarities are real enough to explain why the comparison keeps surfacing. Both mechanisms target the same commodities, are being expanded even as they are negotiated over, and are justified by the same underlying complaint: that a competitor’s costs, suppressed either by subsidized overcapacity or by a lighter regulatory bill, are distorting the market for domestic producers. Global steel overcapacity, estimated at 602 million tonnes in 2024 and projected to reach 721 million tonnes by 2027, is the shared villain cited in both Washington’s and Brussels’ public justifications.
The differences are structural. CBAM is built to match a cost EU producers already carry under their own Emissions Trading System, imperfectly for now given the lingering free allocations, but by design nonetheless. Section 232 imposes no equivalent charge on US steelmakers, making it a pure border tax rather than an equalizing mechanism, a distinction that sits at the center of most WTO-law analysis of non-discrimination. CBAM also lets importers deduct a carbon price effectively paid in the country of origin. The US has no federal carbon-pricing system for that credit to apply to, though California’s cap-and-trade market and the Northeast’s Regional Greenhouse Gas Initiative price carbon for meaningful parts of the US economy at the state level, an inconsistency that complicates any claim that the US is simply carbon-price-free as a matter of policy.
The two mechanisms also differ in how easily they move. Section 232’s rate and scope rest on a presidential national security finding that has been rewritten by proclamation at least four times since mid-2025, largely shielded from WTO review by the security exception. CBAM’s downstream expansion has to survive negotiation between Parliament, Council, and Commission, a slower process that gives trading partners more notice and more chances to contest specific product listings before anything takes effect. The financial exposure is not remotely comparable yet either: a 50 percent tariff on full customs value bites immediately, while CBAM’s 2.5 percent phase-in factor means most of its economic effect is still years away.
A bigger argument than Washington versus Brussels
There is also a case, largely missing from the “tariff by another name” framing, that the EU does not need CBAM to protect its steel industry from underpriced imports, because it already runs a tool that does exactly that with no climate justification attached. The EU’s Steel Overcapacity Regulation, which replaced the bloc’s 2019 safeguard measures on July 1, 2026, doubled the out-of-quota duty from 25 to 50 percent and cut duty-free quota volumes by 47 percent, an explicitly protectionist instrument justified purely by global overcapacity, with no reference to carbon content anywhere in it. If Brussels wanted to shield its steelmakers under the cover of another policy, it would not need CBAM to do it. It already has a blunter instrument sitting right next to it, and just made that instrument considerably stronger.
The charge that CBAM is protectionism wearing a climate label also did not originate in this transatlantic dispute and is not confined to it. India, China, Brazil, South Africa, and the wider BRICS grouping have raised the same objection at the WTO since before CBAM’s 2023 launch, arguing it discriminates against exporters who lack the fiscal capacity to build comparable carbon-pricing systems of their own. The World Bank has put the exposed developing-country export total at $16 billion; UNCTAD estimates that India, Brazil, South Africa, and Indonesia alone could lose up to $5.6 billion a year in exports because of it. That governments as far apart as the Trump administration and the BRICS bloc have converged on the same criticism of CBAM, for different reasons and with different remedies in mind, says more about the mechanism’s design than it does about either camp’s consistency.
Neither government’s record over the past year supports a clean story of one side escalating while the other shows restraint. Washington tightened sharply through 2025 before easing selectively in 2026, in changes France and Germany say made things worse for about half the products reviewed. Brussels’ most consequential CBAM expansion remains an unvoted proposal, while its separate, undisguised steel tariff just got tougher. The next real test of either side’s good faith arrives on a fixed date regardless of what either government says between now and then: December 31, 2026, after which the European Commission becomes legally free, though not obligated, to activate its threatened suspension of tariff preferences on US metal derivatives.
