Add StudioX as a preferred source on GoogleCanadian iron, steel and aluminum exports are not exempt from a new European Union carbon charge at the border, according to internal federal documents. The EU charge starts costing importers money next year.
CBC News obtained the Global Affairs Canada documents through an access to information request. The story broke as Prime Minister Mark Carney hosts EU leaders in Montreal for a Canada-EU summit on Oct. 29 and 30.
What is CBAM?
The EU’s Carbon Border Adjustment Mechanism, or CBAM, puts a carbon price on certain imported goods. It covers cement, iron and steel, aluminum, fertilizers, electricity and hydrogen.
Its final phase began on Jan. 1, 2026. European importers will start paying for CBAM certificates in 2027. The charge starts low and reaches full effect in 2034.
A Global Affairs memo signed Dec. 10, 2025, called the measure “effectively a ‘carbon tariff.'”
Why Canada is not exempt
Canada has a national carbon price and a free trade deal with the EU, known as CETA. But a briefing note says an exemption “is not currently possible.”
The reason is that Canada’s carbon price is not linked to Europe’s carbon market. Switzerland, Norway and Iceland are exempt because their systems are linked to or fall under the EU system. The U.K. is expected to be next.
Countries with a carbon price can get credit for it. The note says it is unclear how the EU will recognize Canada’s system.
Who is exposed
Global Affairs estimates about $2.8 billion in Canadian goods a year are exposed to the charge. Most are metals already hit by U.S. tariffs.
The impact is uneven across the country. Newfoundland and Labrador ships about $885 million a year in iron and steel. Quebec ships about $792 million a year in aluminum, iron and steel.
These figures are averages from 2021 to 2024. Exposure could grow as Canadian companies look to Europe to replace U.S. buyers.
Aaron Cosbey, an economist with the International Institute for Sustainable Development, estimates Canadian steel could cost an extra $150 per tonne by 2034. “That’s a costly prospect,” he told CBC.
An analyst with the Canadian Climate Institute told CBC the decision is “a big deal conceptually.”
Not every company sees a problem. Canada Nickel CEO Mark Selby said low-carbon power could keep its costs to “pennies per tonne over the long run.”
What Ottawa is doing
Canadian diplomats are seeking an arrangement with Brussels before exporters face the border charge. Environment Minister Julie Dabrusin’s office has pushed for the EU to recognize Canada’s industrial carbon pricing.
Dabrusin told CBC on Oct. 22 that her goal is an industrial carbon pricing system that is effective. She did not say whether talks were making progress.
EU officials told reporters both sides are committed to tackling climate change and are working toward similar baselines. Details were not made clear.
The summit
Carney is meeting European Council President António Costa and European Commission President Ursula von der Leyen. Ottawa says the goals include new export markets, lower costs for consumers and more chances for young people to work and study in Europe.
Carney has described the goal as an alliance “so that no one can dictate our choices.”
For B.C., the direct exposure is smaller than in Quebec or Atlantic Canada. But the summit’s outcome will shape how easily Canadian exporters, from metals to other goods, can sell into a market of 27 countries.
Sources: CBC News, Global Affairs Canada, European Commission, Prime Minister’s Office
Harnaik Singh Rathor is the Founder, Publisher, and Editor-in-Chief of StudioX News Canada, Canada's multilingual digital news network serving multilingual diaspora communities across Canada. With a background in media production, public relations, and multicultural communications, he founded StudioX Film and TV Corporation to bridge the gap between mainstream Canadian media and the country's diverse immigrant communities. He is a member of the Canadian Association of Journalists (CAJ), RTDNA Canada, CPRS Vancouver, NEPMCC, and the Canadian Freelance Union (Unifor). Based in Surrey, British Columbia. | LinkedIn: https://www.linkedin.com/in/harnaiksinghrathor/ | Muck Rack: https://muckrack.com/harnaiksinghrathor | Email: editor@studioxnews.ca
