Andrew Puzder, the US ambassador to the EU, has stated that the European Union's Carbon Border Adjustment Mechanism (CBAM) effectively serves the same protectionist purpose as the US' Section 232 tariffs on steel and aluminum, according to a report by the Financial Times.
The ambassador argued that the EU is applying a double standard by criticizing US Section 232 measures while introducing its own border adjustment mechanism covering carbon-intensive imports.
The US introduced Section 232 tariffs on steel and aluminum in 2018 on national security grounds and subsequently extended the measures to certain derivative products containing the two metals. According to Puzder, the measures are intended to protect US producers from import surges resulting from state-supported global excess capacity, particularly in China.
CBAM similarly increases import costs
The EU has criticized the US measures and called for their removal under the US-EU Framework Agreement on Trade. However, Puzder stated that CBAM similarly increases the cost of imported products relative to domestic production. Under CBAM, importers of iron, steel, aluminum and other products within its scope are required to account for their embedded emissions and purchase the corresponding number of CBAM certificates, with their cost linked to EU carbon prices.
Puzder noted that US exporters cannot benefit from deductions for an equivalent domestic carbon price. According to the ambassador, Section 232 and CBAM differ in their stated objectives but have comparable effects. While Section 232 addresses national security concerns and excess steel and aluminum capacity, CBAM seeks to prevent carbon leakage and protect EU producers subject to costs arising from the EU Emissions Trading System. Puzder also criticized the EU's plans to expand the scope of CBAM while challenging the application of US tariffs to additional derivative products.
US and EU disagree over bilateral trade framework
Tensions between the two sides have increased over the interpretation of the August 2025 US-EU Framework Agreement, which capped tariffs on most EU exports to the US at 15 percent while providing duty-free EU access for a range of US products. European officials maintain that expanded US Section 232 derivative tariffs are inconsistent with the agreed tariff ceiling.
Puzder rejected this position, arguing that the EU's implementation and planned expansion of CBAM are likewise inconsistent with efforts under the bilateral framework to reduce tariff and non-tariff barriers. According to the ambassador, both policies ultimately seek to protect domestic industrial production by increasing costs for competing imports, despite being based on different policy objectives.
