The European Union (EU) carbon border adjustment mechanism (CBAM) announced on 14 July could change trade patterns in favour of countries where production is relatively carbon efficient but do little to mitigate climate change. The mechanism could help avoid carbon leakage, but its impact on climate change would be limited – only a 0.1% drop in global CO2 emissions – with higher trade costs for developing countries. At the same time, several of the EU’s trading partners exporting goods in carbon-intensive sectors – including cement, steel, aluminium, oil refinery, paper, glass, chemical and fertilizers – have raised concerns that the CBAM could substantially curtail their exports.