In a bid to rekindle Britain’s post-Brexit relationship with Brussels, Prime Minister Sir Keir Starmer is pressing ahead with plans to align the UK with the European Union’s controversial Carbon Border Adjustment Mechanism (CBAM).
Yet, while the move may win plaudits in European capitals, it risks triggering a transatlantic trade dispute with Washington—setting Britain once again in the crosshairs of American ire under President Donald Trump’s second administration.
The CBAM, often referred to as the EU’s “carbon tariff,” imposes levies on imports from countries with less stringent environmental standards, targeting goods like steel, cement, and fertilisers. It is designed to prevent so-called “carbon leakage,” where companies shift production to jurisdictions with laxer climate rules. For Brussels, it’s a cornerstone of the bloc’s Green Deal. For critics—including President Trump—it is little more than a veiled protectionist measure.
Downing Street sources confirm that the Starmer government views regulatory convergence with the EU as a pragmatic step, not least because it could spare UK exporters from a projected £800 million in annual green tariffs. “We are simply ensuring British businesses are not disadvantaged,” said one senior adviser. “This is about safeguarding jobs and aligning with our own net-zero ambitions.”
But in Washington, the mood is anything but conciliatory. Trump, who derided the EU’s climate agenda as a “globalist scam” during his first term, has made no secret of his opposition to carbon tariffs. Senior figures within the White House are reportedly preparing retaliatory measures should the UK proceed with its own CBAM—slated for introduction by 2027—in lockstep with Brussels.
Such an escalation could put Britain in an unenviable position: caught between two economic giants, each demanding loyalty to its divergent policy path.
“Trying to please both Brussels and Washington is like dancing on a tightrope in a gale,” said Sir Malcolm Rudd, a former UK trade envoy. “Aligning with the EU might make sense from a regulatory and climate perspective, but we underestimate the political symbolism in Washington at our peril.”
Indeed, Trump’s re-election has ushered in a renewed emphasis on “America First” trade policy. The administration’s officials have already signalled discomfort with what they see as European efforts to export climate regulation under the guise of trade policy. For the UK, which has spent years negotiating trade deals post-Brexit, any souring of relations with the U.S.—its second-largest trading partner—could have significant ramifications.
The government insists its proposed carbon levy would be a uniquely British solution, tailored to the domestic context, even if it mirrors key aspects of the EU model. A consultation process is expected to begin later this year, with ministers keen to stress that industries will be given time to adapt.
Yet the optics of the policy—particularly in the eyes of a combustible U.S. president—may prove difficult to manage.
“It’s not just about policy substance, it’s about how it’s perceived in D.C.,” said Dr. Eliza Monroe, an expert in international trade at the London School of Economics. “If Trump views the UK as siding with the EU against American exporters, he won’t hesitate to retaliate.”
Trump’s prior administration did not shy away from aggressive trade action, slapping tariffs on everything from European steel to British Scotch whisky. Few expect a more restrained approach during his current term. UK officials are said to be scrambling to open dialogue with their American counterparts to explain the rationale behind the CBAM alignment and to stave off potential trade penalties.
Meanwhile, pro-Brexit Tory MPs have criticised Starmer’s decision as a quiet reversal of sovereignty gains. “This is regulatory alignment by the back door,” said Sir Bernard Ingham. “It’s a betrayal of the Brexit vote and makes us a rule-taker once more.”
For Starmer, the CBAM gambit is emblematic of a broader recalibration of foreign policy—one which leans toward pragmatic multilateralism and climate leadership. But critics warn that such a pivot risks alienating vital allies at a moment of increasing geopolitical fragmentation.
As the UK edges closer to Brussels on climate regulation, it may soon find itself navigating rougher waters across the Atlantic. In attempting to square the circle between EU cooperation and U.S. diplomacy, the government is learning the hard way that green policy, like trade, is rarely neutral.
With Britain once again poised between two powers, the question now is whether the Prime Minister’s carbon compromise will secure stability—or invite a fresh round of diplomatic turbulence.
