Dynamic Effects of the Carbon Border Adjustment Mechanism on the Foreign Trade Deficit: Evidence from a Toda–Yamamoto Causality Analysis within the Framework of Export Credits

The aim of this study is to analyze the pressure on Türkiye’s trade balance arising from the interaction between exports to the European Union (EU) under the Carbon Border Adjustment Mechanism (CBAM), export credits, and the exchange rate. In this context, monthly data covering the period from 2013/1 to 2025/6 were utilized, and the Fourier–ADF unit root test along with the Fourier–Toda–Yamamoto causality analysis was applied. The variables used in the analysis include the trade deficit, exports to the EU subject to CBAM, the share of export credits in total credit volume, and the real effective exchange rate. Empirical findings indicate that there is no direct causal relationship between the trade deficit and the other variables, whereas a bidirectional causality exists between export credits and the exchange rate, and a unidirectional causality is observed from CBAM-covered exports to the exchange rate. These results suggest that exports are closely linked to financial and exchange rate conditions, while the pressure on the trade balance operates through lagged and indirect mechanisms. The main contribution of the study is to empirically demonstrate that the lack of immediate observable effects of CBAM on Türkiye’s trade performance does not indicate inefficacy, but rather reflects the impact of the transitional phase, firm behaviour characterised by resource shuffling across sectors and geographies, and the functioning of financial adjustment mechanisms. Furthermore, the study highlights that CBAM serves not only as an environmental regulation, but also as a geo-economic policy instrument through which the EU transmits carbon costs into the trade system to influence economic actors.