India and the UK are negotiating a trade deadlock centered on the UK's Carbon Border Adjustment Mechanism (CBAM) and new steel safeguard measures. The UK plans to implement its carbon pricing mechanism by 2027, potentially taxing Indian imports of iron, steel, and aluminum by up to 24 percent. These environmental taxes and reduced import quotas threaten hundreds of millions of dollars in trade. India has signaled possible retaliation, suggesting a link between these carbon costs and concessions on UK luxury goods like scotch whisky.
