Carbon Border Adjustment Mechanisms (CBAM) and trade dynamics: Implications for developing economies

Abstract

The Carbon Border Adjustment Mechanism (CBAM) marks a new era where climate ambition meets trade enforcement. This study critically examines its implications for developing economies-India, Brazil, South Africa, Indonesia, and Vietnam-whose exports are heavily concentrated in carbon-intensive sectors. While CBAM seeks to curb carbon leakage, it risks imposing asymmetric burdens on nations with weaker climate infrastructure. Through data analysis and economic modeling, the study reveals that CBAM may amplify trade imbalances, strain global climate equity, and reshape South-North economic relations. Its future will depend on whether it reinforces decarbonization fairly-or deepens structural injustice.