In a new insight, Director of Energy and Environmental Policy Shuting Pomerleau compares the recent European Union (EU) and United Kingdom (UK) agreement on carbon border adjustment mechanisms (CBAMs) to CBAM legislation proposed in the U.S. Congress.

Key Points:

• The EU and UK reached an agreement this week to link their similar emissions trading systems (ETS) and upcoming CBAMs; the latest U.S. CBAM proposal, the 2025 Foreign Pollution Fee Act (FPFA), was reintroduced in the Senate last month.

• The three jurisdictions’ CBAM policies all deviate from standard carbon border adjustment under a domestic carbon tax—the EU and UK policies are similar with the CBAM import tax rates linked to the domestic ETS, while the U.S. FPFA is de facto tariffs without including any domestic carbon price.

• Looking forward, it’s important to monitor several developments in CBAM policy, including any final changes with the adoption guidelines of the upcoming EU CBAM in 2026, the implementation of the EU-UK ETS and CBAM integration, and the U.S. CBAM prospects and any potential “reciprocal tariffs” the Trump Administration may impose to retaliate against the EU and UK CBAMs.

Read the analysis.