The impact of Carbon Border Adjustment Mechanism on trade in the Russia‐Ukraine war context

Abstract

The Carbon Border Adjustment Mechanism (CBAM) is an impending mechanism that imposes a price on emissions embodied in products imported to the European Union (EU). It is expected to impact international trade substantially. Meanwhile, the Russia‐Ukraine war has been ongoing since March 2022, and resources are being redistributed accordingly. This study simulates the potential impact of CBAM on trade in the Russia‐Ukraine war context by employing the Computable General Equilibrium models. The simulation results show that the CBAM will significantly affect selected countries, and the impact will vary across countries and industries. In the context of the Russia‐Ukraine war, the influence on trade will be considerable.