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

Author

Listed:
  • Dolphin, Geoffroy
  • Ferrucci, Gianluigi

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

Suggested Citation

  • Dolphin, Geoffroy & Ferrucci, Gianluigi, 2026. "The EU’s CBAM: implications for member states and trading partners," Working Paper Series 3177, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:20263177
    Note: 401150
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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F64 - International Economics - - Economic Impacts of Globalization - - - Environment
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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