Policy Signaling of Carbon Tariffs and Export Competitiveness: Evidence from China

Although carbon tariffs were substantively implemented only in 2026, their anticipated introduction by developed economies has generated policy signaling effects that reshape government behavior and trade expectations in emerging markets. This paper examines how carbon tariff policy signals affect China’s export competitiveness by identifying external carbon tariff signaling shocks across provinces. Using panel data from 30 Chinese provinces during 2006–2024, we find that stronger carbon tariff signals significantly reduce export competitiveness, particularly in central, non-coastal, and ETS pilot regions. Mechanism analyses show that policy signals generate positive effects through technological innovation and stricter environmental constraints, but these effects are outweighed by negative direct effects arising from trade policy uncertainty. The findings demonstrate that anticipated carbon tariffs have already influenced local policy priorities and export structures through signaling and expectation channels before formal implementation, highlighting how international climate-related trade policies reshape domestic competitiveness.