The Combined Impacts of Carbon Border Adjustment Mechanisms on the Global Carbon Market and Major Economies: A GTAP Model Perspective

Global carbon reduction targets have driven industries to implement emission reduction measures and accelerate industrial restructuring. To address carbon leakage in the steel sector, the EU introduced the Carbon Border Adjustment Mechanism (CBAM), which has had significant economic and social impacts. However, research remains limited on the risks CBAM poses to the global carbon market and its spillover effects on non-EU countries. Using the two criteria of steel trade volume and carbon market maturity, this study examines 15 countries and four economies—the European Union, BRICS, ASEAN, and California-Quebec—by employing the GTAP model to analyze the combined impact of CBAM on sample countries and economies. The results reveal that CBAM has caused significant economic losses and welfare declines in most countries, including the EU, with China anticipated to be among the hardest-hit. Conversely, the study highlights that California-Quebec, as the world’s first cross-border carbon market linkage, exhibits remarkable adaptability in GDP, trade, and welfare. Overall, CBAM is expected to exert complex and heterogeneous effects on the global carbon market. These findings offer valuable insights for countries to develop carbon market policies and enhance international cooperation on emission reductions.