Global Trade Research Initiative recommended a strategic response to the EU's upcoming Carbon Border Adjustment Mechanism, which will impose a tax of 20-35% on certain imports from January 2026. The think tank suggested renaming current schemes as carbon taxes and adopting a calibrated retaliation strategy. They pointed out that simply adding local taxes may not alleviate the burden on Indian exporters. India had previously retaliated against U.S. tariffs in 2018. The EU's additional regulations on deforestation and supply chain due diligence may further impact Indian exports.
