The UK is set to introduce a carbon border levy on some products from 2027 to protect businesses against cheaper imports from countries with less strict climate policy.
Imports of iron, steel, aluminum, ceramics and cement will be subject to the levy.
The charge will vary depending on the amount of carbon emitted in the production of the imported good and the gap between the carbon price in the UK and country of origin.
Chancellor Jeremy Hunt said: "This levy will make sure carbon intensive products from overseas – like steel and ceramics – face a comparable carbon price to those produced in the UK, so that our decarbonisation efforts translate into reductions in global emissions."
The UK launched an emissions trading system (ETS) in 2021 in order to charge power plants, factories and airlines for each tonne of carbon dioxide they emit to help reach the 2050 net-zero goal.
Other regions across the EU and China operate similar systems, but prices vary across schemes with some regions have none whatsoever.
Britain currently trades around £36.60 per metric ton, while China is a fraction of that at around £8.20.
The Treasury said the design of the carbon border tax would be subject to further consultation next year, including the list of products affected.