{
  "title": "The EU's CBAM: Implications for Member States and Trading Partners",
  "publication": "IMF Working Papers, June 20, 2025",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2025/06/20/the-eu-s-cbam-implications-for-member-states-and-trading-partners-562402",
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  "summary": "The EU Carbon Border Adjustment Mechanism (CBAM) came into force on October 1, 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.",
  "sections": [
    {
      "heading": "Summary and scope",
      "content": "- The EU Carbon Border Adjustment Mechanism (CBAM) came into force on October 1, 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.\n- 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.\n- Subject areas: Environment; Exports; Greenhouse gas emissions; Imports; International trade; Trade balance.\n- Keywords: Carbon Leakage; Carbon Taxation; CBAM cost; CBAM products; emission allowance; Emissions Trading; EU Carbon Border Adjustment Mechanism; EU ETS price; EU's CBAM; expanded CBAM; Exports; Global; Greenhouse gas emissions; Imports; Trade balance; Trade Policy."
    },
    {
      "heading": "Key quantitative findings",
      "content": "- Average direct impact on EU countries’ trade: adds 0.1 percent to the value of EU imports when averaged across all imports.\n- Average impact on non-EU countries’ exports to the EU: adds 0.04 percent to the average cost of non-EU countries’ exports to the EU.\n- Maximum observed impact on specific exports: 1.2 percent.\n- Coverage and document metadata: Pages: 30; Volume: 2025; Issue: 125; Series: Working Paper No. 2025/125; DOI: https://doi.org/10.5089/9798229000420.001; ISBN: 9798229000420; ISSN: 1018-5941."
    },
    {
      "heading": "Product- and sector-specific impacts",
      "content": "- The overall direct impact is small on average, but effects could be sizeable for specific products.\n- Notable high-impact products include iron, steel and aluminium—sectors that help explain CBAM’s political salience."
    },
    {
      "heading": "Scenarios and future risks",
      "content": "- An expanded CBAM that features full coverage of ETS sectors and a significantly higher carbon price could entail larger costs in the more distant future.\n- Timing of obligations: reporting since October 1, 2023, payment obligation starting from 2026."
    },
    {
      "heading": "Policy-relevant implications",
      "content": "- On average, the immediate trade cost implications for EU members and trading partners are limited, but targeted exposure in carbon-intensive products implies concentrated distributional and political effects.\n- Monitoring and analysis should focus on iron, steel and aluminium sectors where effects could be sizeable.\n- Consideration of expansion scenarios (full ETS sector coverage and higher carbon prices) is warranted given the potential for materially larger future costs.\n\nGeoffroy Dolphin and Gianluigi Ferrucci, \"The EU's CBAM: Implications for Member States and Trading Partners\", IMF Working Papers 2025, 125 (June 20, 2025), DOI: https://doi.org/10.5089/9798229000420.001.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2025/06/20/the-eu-s-cbam-implications-for-member-states-and-trading-partners-562402"
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    "Authors: Geoffroy Dolphin, Gianluigi Ferrucci",
    "Published: June 20, 2025",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798229000420.001",
    "The EU Carbon Border Adjustment Mechanism (CBAM) came into force on October 1, 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.",
    "Subject areas: Environment; Exports; Greenhouse gas emissions; Imports; International trade; Trade balance.",
    "Keywords: Carbon Leakage; Carbon Taxation; CBAM cost; CBAM products; emission allowance; Emissions Trading; EU Carbon Border Adjustment Mechanism; EU ETS price; EU's CBAM; expanded CBAM; Exports; Global; Greenhouse gas emissions; Imports; Trade balance; Trade Policy.",
    "Average direct impact on EU countries’ trade: adds 0.1 percent to the value of EU imports when averaged across all imports.",
    "Average impact on non-EU countries’ exports to the EU: adds 0.04 percent to the average cost of non-EU countries’ exports to the EU.",
    "Maximum observed impact on specific exports: 1.2 percent.",
    "Coverage and document metadata: Pages: 30; Volume: 2025; Issue: 125; Series: Working Paper No. 2025/125; DOI: https://doi.org/10.5089/9798229000420.001; ISBN: 9798229000420; ISSN: 1018-5941.",
    "The overall direct impact is small on average, but effects could be sizeable for specific products.",
    "Notable high-impact products include iron, steel and aluminium—sectors that help explain CBAM’s political salience.",
    "An expanded CBAM that features full coverage of ETS sectors and a significantly higher carbon price could entail larger costs in the more distant future.",
    "Timing of obligations: reporting since October 1, 2023, payment obligation starting from 2026.",
    "On average, the immediate trade cost implications for EU members and trading partners are limited, but targeted exposure in carbon-intensive products implies concentrated distributional and political effects.",
    "Monitoring and analysis should focus on iron, steel and aluminium sectors where effects could be sizeable.",
    "Consideration of expansion scenarios (full ETS sector coverage and higher carbon prices) is warranted given the potential for materially larger future costs.",
    "**Working Paper**"
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