The European Union’s (EU) Carbon Border Adjustment Mechanism (CBAM) entered its full implementation phase on January 1, 2026. Rules, such as the default emissions values, will increase the compliance costs for products entering the EU, thereby creating additional trade constraints. This paper creates a coupled model integrating the Global Trade Analysis Project-E (GTAP-E) and China’s Multi-Regional Input–Output (MRIO) model that converts carbon costs under different emissions accounting rules into Ad Valorem Equivalent (AVE) tariff shocks. The model is then used to assess the direct and indirect impacts of the CBAM on China’s related industries and provincial economies systematically. The study finds that, compared to accounting methods based on sectoral average emission levels, the current Default Value (DV) rules will significantly raise the AVE tariff levels for China’s steel and aluminum products, amplifying export and output losses. The impact of the CBAM spreads through the domestic industrial chain via intermediate input channels, with indirect effects accounting for a significant proportion in most provinces. This indicates that its impact will extend from the sectoral level to the regional level. The magnitude of the impact and the scale of the losses vary from province to province, primarily due to variations in industrial structure, degree of dependence on exports to the EU, and position within the industrial chain. The research indicates that the impact of the CBAM on trade is significantly rule-driven, and its economic consequences should not be understood merely through changes in carbon prices. This paper provides empirical evidence for identifying the regulatory impact of the CBAM and for formulating China’s response strategies within the multilateral trade and climate governance framework.
LV et al. (Wed,) studied this question.