Internal Documents Reveal Canadian Metal Exports Face EU Carbon Tariff Despite National Pricing
Internal documents from Global Affairs Canada show that Canadian iron, steel, and aluminum exports are not exempt from the European Union's Carbon Border Adjustment Mechanism. Approximately $2.8 billion in annual exports face compliance costs starting in 2027, with full implementation by 2034.
Canadian iron, steel, and aluminum exports will not be exempt from the European Union’s Carbon Border Adjustment Mechanism (CBAM), despite Canada’s national carbon pricing system and its existing trade agreement with the bloc, according to internal government documents.
A memo from Global Affairs Canada, signed on Dec. 10, 2025, describes the CBAM as a "border charge" or "effectively a carbon tariff." The department estimates that $2.8 billion worth of Canadian goods annually are exposed to the EU carbon import levy. 
The financial exposure is concentrated heavily in specific provinces. An annual average of $885 million worth of Newfoundland and Labrador’s iron and steel exports face the tariff, while in Quebec, the value of exposed aluminum, iron, and steel exports amounts to about $792 million annually.
The EU exempts countries such as Switzerland, Norway, Iceland, and soon the United Kingdom because their carbon pricing systems are linked to Europe’s Emissions Trading System. Canada does not qualify for this exemption because its carbon price is not linked to Europe's. In 2025, the EU carbon price stood at approximately $134 per tonne, compared to $95 per tonne in Canada.
Canadian exporters will begin facing additional compliance costs and a carbon charge at the border starting in 2027, with the mechanism scheduled for full implementation by 2034. Economist Aaron Cosbey estimates that by 2034, Canadian steel could cost an additional $150 per tonne due to the tariff. 
Canadian officials are working to minimize these impacts during the Canada-EU Summit in Montreal. Prime Minister Mark Carney stated that the summit marks the start of negotiations for Canada to become a closer strategic partner to the 27-member bloc.