Canada and EU Making Progress on Carbon Tariff Dispute, Carney Says
Prime Minister Mark Carney announced progress in resolving trade irritants with the European Union over its Carbon Border Adjustment Mechanism during the Canada-EU summit in Montreal. The EU will recognize Canada's carbon price, though the exact credit amount remains under negotiation ahead of a 2027 deadline.
Prime Minister Mark Carney announced that Ottawa has made progress in resolving issues surrounding the European Union's carbon tariff during the closing news conference of the Canada-EU summit in Montreal. 
Carney stated that common solutions are being found for the levy applied to energy-intensive Canadian exports. EU Commission President Ursula von der Leyen agreed with Carney's assessment, describing the matters as "trade irritants."
The EU's Carbon Border Adjustment Mechanism (CBAM) is currently applied at a low level and is scheduled to reach full implementation in 2034. Despite Canada having a national carbon price and a decade-old trade deal with the EU, an internal document obtained by CBC News revealed that Canada is not exempt from the carbon tariff.
An internal Global Affairs Canada document estimated that $2.8 billion worth of goods annually are exposed to the EU carbon import levy, based on data from 2021 to 2024. The metals primarily affected include iron ore, steel, aluminum, and cement—sectors already facing U.S. tariffs. Under the mechanism, Canadian exporters must assess, report, and verify embodied carbon in their products, creating compliance costs.
Jonathan Wilkinson, Canada's ambassador-designate to the EU, confirmed that diplomatic talks are progressing. He stated that the EU will recognize Canada's carbon price, although the exact credit amount producers will receive is still being worked out. 
Wilkinson indicated that the agreement regarding carbon price recognition needs to be finalized by September or October 2027. Because Canada maintains a carbon price while countries like the United States do not, Canada may hold a competitive advantage once the mechanism is fully in place.