## The EU's CBAM: Implications for Member States and Trading Partners

_IMF Working Papers, June 20, 2025_

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## Bibliographic details
- Authors: Geoffroy Dolphin, Gianluigi Ferrucci
- Published: June 20, 2025
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798229000420.001

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### Summary and scope
- 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.

### Key quantitative findings
- 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.

### Product- and sector-specific impacts
- 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.

### Scenarios and future risks
- 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.

### Policy-relevant implications
- 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.

*Geoffroy 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.*

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_Source: https://www.imf.org/en/publications/wp/issues/2025/06/20/the-eu-s-cbam-implications-for-member-states-and-trading-partners-562402_