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Influence of The Carbon Border Adjustment Mechanism on The Imports of Passenger Vehicles to Germany

Jasmin Remmel, Dayan Lin
pp.344-350 DOI: 10.62051/fgwgez02 December 31, 2025
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Abstract: Climate policy is increasingly influencing trade patterns through carbon-cost differentials. This paper investigates how the EU Carbon Border Adjustment Mechanism (CBAM) may reconfigure Germany's passenger-vehicle imports once carbon pricing at the border becomes binding. Using a simulation-based gravity framework with a balanced panel of 47 exporters (2008–2024), the author constructed two CBAM exposure measures: (i) a Structure Effect capturing ETS-aligned carbon-price asymmetries scaled by technological capability, and (ii) an Effective Cost interaction that amplifies penalties for carbon-intensive producers. Results show a two-channel mechanism: the Structure Effect is positively correlated with German imports, consistent with sourcing shifts toward technologically advanced, low-carbon suppliers, while the Effective Cost significantly curtails imports from high-emission exporters—particularly non-EU countries fully exposed to border carbon pricing. Overall, CBAM is predicted to generate a moderate change in import levels but a meaningful reallocation in Germany's supplier composition, with implications for supply-chain resilience and the distribution of adjustment pressure across exporting countries.
Keywords: Carbon Border Adjustment Mechanism, Automotive Industry, Imports, Gravity Model.
APA Citation: Jasmin Remmel, Dayan Lin (2025). Influence of The Carbon Border Adjustment Mechanism on The Imports of Passenger Vehicles to Germany. Transactions on Economics, Business and Management Research, 16(1), 344-350. https://doi.org/10.62051/fgwgez02

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