EU carbon tariff could cost U.S. industry over $750 million by 2028 without domestic carbon pricing

The EU's Carbon Border Adjustment Mechanism (CBAM) took effect in January 2026, charging importers of carbon-intensive goods like steel, aluminum, and cement based on embedded emissions. A new Niskanen Center calculator estimates U.S. exporters face roughly $231 million in CBAM costs in 2026 alone, with the three-year cumulative bill potentially exceeding $752 million by 2028. These are dollars the U.S. Treasury could have collected if Congress had implemented a domestic carbon price. The estimate is an upper bound due to several factors. Default emissions values are set high to encourage verified reporting, and cleaner U.S. facilities could reduce exposure. Early 2026 trade data shows iron and steel shipments to the EU down 85% and aluminum down 63%, suggesting exporters are either avoiding the tariff or losing market share. The actual cost passed back to U.S. firms depends on how much EU buyers can absorb or shift to other suppliers. The article highlights a clear policy gap: without a U.S. carbon price, American industry pays Europe instead.