Treasury written question – answered at on 16 September 2025.
Ben Obese-Jecty
Conservative, Huntingdon
To ask the Chancellor of the exchequer, what assessment she has made of the potential impact of the introduction of CBAM in January 2027 on defence imports.
Dan Tomlinson
The Exchequer Secretary
The UK government is introducing a carbon border adjustment mechanism (CBAM) on 1 January 2027 to address the risk of carbon leakage. The UK CBAM is a new tax which will ensure that highly traded, carbon intensive goods which are imported from overseas face a comparable carbon price to what is paid by manufacturers producing the same goods in the UK.
The CBAM will only initially be applied to specific imports from a small number of production sectors (aluminium, cement, fertiliser, hydrogen and iron & steel) at risk of carbon leakage. This encompasses less than 3% of total UK imports.
A draft tax information and impact note is publicly available at the following link: https://www.gov.uk/government/consultations/draft-legislation-carbon-border-adjustment-mechanism/draft-tax-information-and-impact-note
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The chancellor of the exchequer is the government's chief financial minister and as such is responsible for raising government revenue through taxation or borrowing and for controlling overall government spending.
The chancellor's plans for the economy are delivered to the House of Commons every year in the Budget speech.
The chancellor is the most senior figure at the Treasury, even though the prime minister holds an additional title of 'First Lord of the Treasury'. He normally resides at Number 11 Downing Street.
