Assessing the impact of the EU’s Carbon Border Adjustment Mechanism on Taiwan’s trade and economy

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13 November 2023

Monica Fu, a recent alumni of our Climate Change Finance and Investment MSc, has shared the outcomes of her research on the potential impact of the EU’s Carbon Border Adjustment Mechanism (CBAM), particularly for Taiwan.

Taiwan is the EU’s third-largest trading partner, and the CBAM will have a significant impact on Taiwan’s trade and economy. Monica’s dissertation conducts a quantitative analysis of CBAM's potential impact on Taiwan's exports.

The results of her work indicate that “CBAM's applicable exports constitute only 1% of Taiwan’s total exports, suggesting that the overall impact of CBAM on Taiwan is expected to be limited”, with iron and steel being the sectors most heavily affected. However, impacts are expected to escalate and “by 2034, Taiwan's CBAM subjective exports may incur a 5.6% to 10.1% increase in cost due to the imposition of a ‘carbon tariff’”.