Trade & Corporate Sustainability Focus | H1 2026
Regional Policy Brief
The Regional Policy Brief is a WBCSD product exclusively for members. This edition covers key regional policy developments from the first half of 2026 and their implications for corporate sustainability strategy, focusing on: trade measures and tariffs, localization and new trade partnerships, and carbon border mechanisms.
Main Policy Developments
Trade Measures & Tariffs
US tariff policy became more fragmented:
February 2026: The US Supreme Court ruled emergency tariff powers invalid1. The US introduced a temporary 10% across-the-board tariff2 (expiring July 2026), and increased reliance on alternative authorities. The trade-weighted average tariff fell from 15.3% to 8.3%3, while uncertainty increased.
China export rebate cuts triggered a surge in exports:
Effective 1 April 2026: China reduced export tax rebates from 9% to 6% for batteries and from 9% to 0% for solar. Ahead of the changes, battery exports rose 44% month-on-month in March 2026 and solar shipments more than doubled, accelerating exports toward Africa, Southeast Asia, and Latin America4.
Localization & New Trade Partnerships
EU moves toward "Made in Europe" requirements:
Under the EU Industrial Accelerator Act, the EU proposed Union-origin requirements covering ~40% of clean-energy auction volumes, alongside EV procurement conditions. The proposal remains under negotiation, with EV provisions expected to move faster than energy auction requirements5.
EU-Mercosur advanced toward implementation:
The agreement's terms – including the elimination of tariffs on 91% of EU exports and improved access to lithium/nickel6 - were locked in during H1, signalling a shift from trade diversification ambitions to a more structural change in EU supply access.
Carbon Border Mechanisms
CBAM moved from reporting to financial compliance, and its first expansion was proposed:
January 2026: CBAM entered its "definitive phase"7, making importers subject to financial obligations, not just reporting. During H1, the EU proposed expanding CBAM to ~180 downstream steel and aluminium products, with chemicals and refined oil products flagged as possible future additions. Debate on temporary exemptions, including fertilizers (under Article 27a), began during H1 and remained unresolved at period end8.
Business Implications
- Policy fragmentation is reshaping global trade. Tariffs, localization requirements, climate regulations, and export controls are increasingly influencing market access and investment decisions, creating a more complex operating environment for businesses.
- Supply chains are becoming more regionally differentiated. Diverging policy frameworks across major markets, including the US, EU, and China, are contributing to more segmented production networks, with some companies adapting sourcing and manufacturing approaches to regional requirements.
- Market access is increasingly shaped by policy as well as commercial considerations. Domestic content requirements, trade agreements, subsidies, and regulatory requirements are becoming key factors in investment, production, and export decisions.
- Growing uncertainty around policy scope, exemptions, and implementation is increasing the importance of regulatory scenario planning and compliance readiness, particularly for businesses operating across multiple export markets.
- Emerging markets are becoming increasingly important destinations for clean technology trade. As companies navigate changing policy conditions and investment incentives, demand is growing across Latin America, Africa, and Southeast Asia, creating new commercial opportunities alongside greater regulatory and geopolitical complexity.
1 European Parliament - What to expect after the landmark United States Supreme Court tariff ruling?
2 Bruegel - An EU strategy in the wake of the United States Supreme Court tariffs ruling
3 Global Trade Alert - What the SCOTUS ruling on IEEPA means for US tariffs
4,5,8 BloombergNEF
6 Steptoe - EU-Mercosur Agreement to Reshape Transatlantic Trade Dynamics
7 ICC - CBAM enters a definitive phase: what businesses need to know
