The Impact of the EU Carbon Border Adjustment Mechanism on China’s Automotive Product Export Trade

Abstract

With the growing global emphasis on energy conservation and emissions reduction, countries and regions such as the United States, the European Union (EU), and Japan have enacted legislation to implement carbon tariffs. As a developing nation, China bears significant responsibilities in carbon taxation. The automotive industry, a pillar of China’s national economy, has long been a cornerstone of foreign trade exports. However, as a representative of the manufacturing sector, it is also a major contributor to carbon emissions. The implementation of the EU’s Carbon Border Adjustment Mechanism (CBAM) is expected to intensify challenges for China’s automotive exports, particularly for components predominantly exported to developed regions like the EU and the U.S. A review of existing literature on CBAM reveals a scarcity of research on its specific impacts on automotive manufacturing exports and a lack of methodological diversity. This study employs the Multi-Regional Input-Output (MRIO) model to calculate carbon emissions in the automotive industry and utilizes the Global Trade Analysis Project (GTAP) model to simulate dynamic impacts on domestic production and exports. The findings aim to propose strategies for reconciling the stable growth of China’s automotive manufacturing sector with emissions reduction goals.