Carbon border adjustment mechanism and Vietnam’s exports: Evidence from a market-level event-study design

Abstract

As climate policy increasingly intersects with international trade, carbon border measures such as the European Union’s Carbon Border Adjustment Mechanism (CBAM) may reshape export patterns in developing economies. This paper provides one of the first empirical assessments of CBAM using monthly HS6-level trade data for Vietnam. Exploiting the introduction of CBAM’s transitional phase in October 2023, a difference-indifferences event-study design is employed to compare exports to the EU with those to the United States. An interrupted time series model is used as a robustness check. The results indicate a significant and persistent decline in export volumes to the EU following CBAM implementation, with no evidence of pre-trend differences. The findings highlight the growing impact of green trade barriers and the challenges they pose for developing exporters.