The Carbon Border Adjustment Mechanism (CBAM) is a proposed policy by the European Union to apply a carbon price on imported goods from non-EU countries. The policy aims to level the playing field for European companies that face strict emission reduction targets and costs, while also incentivizing non-EU countries to reduce their emissions. The CBAM would initially require importers to report on the carbon content of their products, with a transition period before the implementation of the carbon pricing mechanism.