The EU’s CBAM: implications for member states and trading partners

Geoffroy Dolphin and Gianluigi Ferrucci

No 3177, Working Paper Series from European Central Bank

Abstract: The EU Carbon Border Adjustment Mechanism (CBAM) came into force on 1 October 2023, introducing reporting requirements for importers of covered products and, from 2026, an obligation to pay a fee on the carbon content of imported goods. This paper uses indices of ad valorem tariffs to assess the incidence of the EU CBAM on both EU member states and the EU’s trading partners. Overall, the direct impact on EU countries’ trade is estimated to be small, adding 0.1 percent to the value of EU imports when averaged across all imports, and 0.04 percent to the average cost of non-EU countries’ exports to the EU—with a maximum of 1.2 percent. However, effects could be sizeable for specific products such as iron, steel and aluminium, which can help explain CBAM’s political salience. Moreover, an expanded CBAM featuring full coverage of ETS sectors, and a significantly higher carbon price could entail larger costs in the more distant future. JEL Classification: F13, F64, Q54, Q56

Keywords: carbon leakage; carbon taxation; emissions trading; trade policy (search for similar items in EconPapers)
Date: 2026-01
Note: 401150
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20263177

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