28 November 2025 – The government of the United Kingdom has officially classified the “Carbon Border Adjustment Mechanism” planned there as a “new tax.” Manufacturing companies are leaving Germany: the main reasons are rising protectionism and tariff policy.
UK government classifies CBAM as a tax
On 26 November, the government of the United Kingdom published a policy paper on the planned “Carbon Border Adjustment Mechanism” (CBAM). The remarkable thing is that the UK has officially classified the CBAM planned there as a “new tax” and refers to it as a tax at a total of ten different points in the paper.
This puts the UK at odds with the previous position of the European Union, which has for years desperately tried not to call CBAM a tax – as doing so could lead to legal complications.
OECD warns of damage to competitiveness
The looming double taxation through CBAM and the planned EU steel tariffs recently led to increasing critical questions within the EU about whether this would be legally permissible and whether it would impose a significant additional burden on affected companies. In March 2025, even the OECD warned of impending losses in the competitiveness of European companies, not only on the internal market but also in exports, due to the introduction of CBAM.
Protectionism and tariff policy driving companies out of Germany
Despite recently improved supply chain stability, 92% of companies surveyed this year by the consulting firm Deloitte struggled with higher procurement costs. Procurement costs increased for two-thirds (66%) and bureaucracy for half (52%) of respondents. Margins declined for many participants in the Deloitte survey, and revenues fell.
The main reasons cited are increased protectionism and new tariffs by important trading partners, which have put companies under considerable pressure over the past twelve months.
One in five companies no longer produces in Germany
Only one in ten companies was spared from this; the vast majority had to focus more strongly on costs. In production, the relocation abroad is increasing due to intensified protectionism and new tariffs. Nearly one in five companies (19%) no longer produces in Germany.
A trend that will intensify dramatically: 43% of companies plan to relocate production in the next two to three years – two years ago it was only 33%. In development (30%), research (35%), and procurement, sales, and marketing, more and more companies are moving abroad – according to the analysis by the German newspaper Bild.
Even if the Deloitte report currently refers primarily to new tariffs in other regions, this trend is also clearly visible in the EU. With the planned introduction of new protectionist measures, such as in steel, this trend of relocation will intensify further.
Outlook on Europe’s tariff dreams
The voices in Europe currently calling for an extension of CBAM and tariffs to downstream products fail to recognise that this will only further increase supply chain stress and further accelerate the relocation of domestic production. Being able to produce competitively means having access to low-cost input materials. Exports only become more expensive when the input materials have first been burdened with taxes, tariffs, and high bureaucratic costs. And on the internal EU market, purchasing power drops significantly, even if politicians try to make us believe otherwise.
The U.S. government recently had to roll back tariffs on more than 2,800 products because they had caused living costs in the United States to rise too sharply. A preview of what the current wishful dreams of steel tariffs, CBAM, and their expansion will trigger in the EU as well. Time to put a consistent end to this trend!
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