Item type: Journal ArticleAuthors: Nhan NT,Nguyen DC,Anh CT,Anh NH
Title: Implications of the EU carbon border adjustment mechanism (CBAM) for Vietnam: a static CGE analysis
Journal: SN Business & Economics
Publication year: 2026
Volume: 6
Issue: 9
Pages: 304
Date published: 2026-08-17
ISSN: 2662-9399
URLs: https://doi.org/10.1007/s43546-026-01342-y;[url]http://dx.doi.org/10.1007/s43546-026-01342-y[/url]
DOI: 10.1007/s43546-026-01342-y
Abstract:
The European Union＊s Carbon Border Adjustment Mechanism (CBAM) charges imports of selected carbon-intensive goods for their embedded emissions, phasing in between 2026 and 2034. This paper quantifies its effects on Vietnam using the GTAP-E computable general equilibrium model. Two features are new. The tax base follows the regulation＊s own scope, which charges direct emissions and adds indirect emissions only for cement and fertilisers, rather than the total upstream carbon that assessments conventionally price. It is also endogenous: the charge is computed inside the model and falls if producers decarbonise, so whether they do is answered, not assumed. CBAM-covered goods are 5.4 per cent of Vietnamese exports to the EU27, of which iron and steel is 90 per cent. Incidence therefore follows exposure rather than carbon intensity. Iron and steel faces a charge an order of magnitude below cement＊s and fertiliser＊s, at 3.5 against above 60 per cent, yet contracts most, by 2.4 per cent. The charge on steel does not fall, so producers reduce output rather than change their fuel mix. In the short run, national emissions fall by 0.09 per cent and welfare by USD 69 million, almost entirely through the terms of trade; the loss roughly doubles under the long-run closure. A domestic carbon price of USD 20 per tonne cuts emissions by 19.9 per cent, two orders of magnitude more, and lowers the border charge through both decarbonisation and crediting. CBAM is a concentrated trade measure for one sector and a negligible climate measure for the country.
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