EU carbon tax risks global trade disaster, Piyush Goyal warns

Commerce and Industry Minister Piyush Goyal has cautioned the European Union that its carbon tax on steel and heavy regulatory apparatus risk creating severe economic disruption, driving inflation, and damaging Europe's own industrial base.

Speaking at the Berlin Global Dialogue on 22 October, Goyal warned that Brussels is "inviting disaster" and risking self-inflicted economic harm by erecting non-tariff barriers against trading partners. He pointed out that unilateral trade mechanisms, notably the Carbon Border Adjustment Mechanism (CBAM), will sharply drive up the cost of raw materials necessary for core infrastructure, including highways, ports, airports, and water utilities.

Under CBAM, exporters of steel, aluminium, and cement face European import tariffs projected between 20% and 35%. Goyal argued that rather than speeding up sustainability, these levies burden essential sectors and penalise developing nations that are expanding vital public works.

Impact on European competitiveness

Goyal highlighted how regulatory accumulation is already squeezing European manufacturers. The EU has put in place roughly 75 to 77 separate trade and environmental regulations, creating compliance hurdles that weaken its domestic firms on the global stage.

Citing the German automotive sector, Goyal noted that domestic car sales in Germany have dropped by 15% to 20% over the past decade. Imposing additional costs on steel and aluminium will only make European vehicle manufacturing and heavy industry less competitive worldwide.

He also cautioned that trade partners could respond with reciprocal measures to safeguard their domestic industries, compounding European inflationary pressures.

India's balanced approach to global trade

Contrasting New Delhi’s policy with European restrictions, Goyal stated that India is focused on enhancing manufacturing competitiveness, securing supply chains, and pursuing balanced, mutually beneficial free trade pacts. He cited agreements with countries such as Singapore as models that expand commerce without imposing punitive mechanisms like CBAM or the European Union Deforestation Regulation (EUDR).

Defending India's climate record, Goyal underscored that India accounts for merely 3% to 3.5% of cumulative historical global emissions while providing a stable, fast-growing home to 17% of the global population. As India steps up as an engine of global manufacturing and green transformation, Goyal made clear that global partnerships must be rooted in equity, affordability, and mutual economic respect.