A proposed 2028 expansion of the Carbon Border Adjustment Mechanism (CBAM) could cover selected downstream steel and aluminium products, changing the cost comparison for European equipment manufacturers deciding whether to import materials, fabricated parts or complete machines. The final scope had not been agreed as of October 2026.
Manufacturers can face different customs classifications, transport costs, documentation requirements and carbon obligations when choosing among products that may compete in the same tender. Under the existing mechanism, specified imported metal goods face obligations, while a broad range of completed machines remains outside CBAM’s initial six sectors.
Importers therefore cannot assume that every finished product avoids a charge under current rules, or that every assembled product will be covered under a future expansion. The outcome depends on the goods classification, the applicable annex and the import date.
Compare costs across the supply chain
Buying steel plate for fabrication in Europe entails local welding, machining, finishing and labour costs. Importing a welded housing shifts those operations abroad and can bring longer lead times, quality-acceptance risks and potential tariff consequences; buying a complete machine may also reduce local manufacturing content and increase dependence on an overseas supplier for technology support and spare parts.
For a steel-intensive vessel, procurement teams would need to establish the goods codes and embedded-emissions methodology for each configuration: an EU-produced vessel made from imported raw material, one welded abroad, or one delivered as part of an integrated process package. The comparison should also cover alloy specifications, nondestructive-testing requirements, certificates, delivery conditions, insurance, warranty coverage and plant acceptance.
A low ex-works quotation may translate into a higher installed cost if documentation or tolerances are inadequate. Carbon costs belong in sourcing comparisons, but should not be treated as the only cost or consideration.
In a hypothetical example, an EU-made fabricated housing costs EUR 900, compared with EUR 810 for an imported housing. The imported offer’s nominal discount is EUR 90, but freight, inspection, inventory financing and a quantified probability of rework would need to be added; the saving could disappear if a few percent of imported pieces need repair or extra inventory is required to protect the assembly schedule.
Keep legal costs distinct from sourcing estimates
An EU supplier may include the cost of EUA purchases and electricity in its quotation even when its product does not attract CBAM on domestic sale. A non-EU competitor faces direct CBAM liability only when a covered item crosses the border, and both suppliers may source components from the same Asian factories.
That distinction matters when manufacturers assess the carbon exposure of competing offers. Treating an estimated embedded-carbon shadow price as a legal import tax on an out-of-scope assembly would overstate costs, while excluding genuine compliance obligations would understate them.
The proposed Industrial Accelerator Act is another policy variable, distinct from CBAM. Stricter origin or local-content rules associated with procurement support could strengthen the case for keeping manufacturing stages in Europe, even where labour or energy costs are higher.
Management teams should test current customs and CBAM rules, the possible 2028 downstream perimeter and a downside scenario with higher energy and freight costs, while retaining quality, lead-time and capital requirements in each scenario.
The effect on manufacturing geography is not necessarily a wholesale move out of Europe. European factories retain advantages in customer proximity, qualification, design ownership, industrial know-how and aftermarket support; some lower-value fabrication could move abroad while precision processing and final testing remain close to users.
Keeping prototype fabrication and qualification near design teams may speed product improvement even when mass production is outsourced. Companies that lose control of welding procedures, machining tolerances and tooling may find it much more expensive to bring assembly back in-house, while carbon reform may shift the cost boundary between locations.
The sourcing decision also turns on whether a factory seeks to preserve manufacturing know-how and capabilities that are difficult to reacquire. Manufacturers may need to change the boundary of their value chains without losing technical control of their products.
