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Assessing the EU CBAM’s Impact on China-Europe Export Costs

Author

Listed:
  • Shixiong Cheng
  • Yuchen Sun
  • Xiuzhen Li
  • Wei Li
  • Linnan Ge

Abstract

This study develops a quantitative trade structure model to analyze and estimate the effects of the European Union’s Carbon Border Adjustment Mechanism (CBAM) on China’s bilateral trade costs over the 2027–2032 period. Focusing on five key markets—Germany, the United Kingdom, Italy, France, and Spain—it examines how CBAM-induced cost changes vary by industry and how advances in production technology may help offset these increases. The findings reveal that the impact of CBAM varies across industries, with high-carbon emitting sectors facing a substantial increase in export costs. This rise in costs reduces the competitiveness of these industries in the global market, potentially leading to a loss in market share. However, technological progress and green innovation can partially offset the rise in trade costs and mitigate the negative effects on export volumes caused by CBAM. The study emphasizes the importance of identifying key technologies to support the green transformation of high-carbon emitting industries, strengthening the export capabilities of low-carbon emitting industries, and actively engaging in global climate governance. This engagement will help shape international trade rules and secure more favorable trade terms for China.

Suggested Citation

  • Shixiong Cheng & Yuchen Sun & Xiuzhen Li & Wei Li & Linnan Ge, 2026. "Assessing the EU CBAM’s Impact on China-Europe Export Costs," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 62(2), pages 379-397, January.
    • Handle: RePEc:mes:emfitr:v:62:y:2026:i:2:p:379-397
    DOI: 10.1080/1540496X.2025.2533261
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