UK and EU poised to strike deal sparing British business from carbon border tax

October 2, 2025

UK and EU poised to strike deal sparing British business from carbon border tax

Exclusive: temporary deal to shield UK exporters from levys impact is now viewed by both sides as likelyThe EU and Britain are poised to agree a deal sparing British businesses from a carbon border tax being introduced in 2026, with officials targeting late spring for the next EU-UK summit.The EU is introducing a carbon border adjustment mechanism (CBAM) on 1 January targeting imports produced using carbon-intensive methods, such as steel, glass and fertiliser.Businesses have been concerned about the impact of the EU tax on UK consumer bills and the prospect of cheap goods originally destined for Europe, such as Chinese steel, flooding the British market.The UK is introducing its own version of the tax but not until 2027. Ministers have been seeking a temporary exemption from the EU tax until the UK and EU align their carbon emission schemes.The Guardian understands that the EU and UK are working on mechanisms that would shield British exporters from the levys impact and that a temporary deal is now viewed by both sides as likely.An agreement would represent a boost to businesses that rely on trade with the EU. It comes ahead of the next UK-EU summit, which has been pencilled in for May or June.At this years summit , in May, Keir Starmer and the European Commission president, Ursula von der Leyen, agreed to link the UK and EU emission schemes and unveiled a formal defence and security pact.A deal is expected to conclude within weeks allowing British defence companies to participate in military projects funded by EU defence loans. The first round of applications is due by the end of November.The EU and UK are also in negotiations over a deal to allow thousands of young Europeans to temporarily live and work in the UK and vice versa.

Recommended: VDIAGTOOL VD70lite VD70 All System Car diagnostic Tools Automotive Bidirectional Scanner Lifetime Free Update Key ProgrammerStay prepared with VDIAGTOOL VD70lite VD70 All System Car diagnostic Tools Automotive Bidirectional Scanner Lifetime Free Update Key Programmerbuilt for reliable, everyday performance.