The EU’s proposed CBAM expansion could bring selected finished metal products within the carbon border mechanism from 2028, increasing compliance pressures on Southeast European manufacturers.
Proposed Expansion Moves Towards Negotiations
The European Union is advancing plans to extend the Carbon Border Adjustment Mechanism (CBAM) beyond primary steel and aluminium to selected finished goods, potentially including fasteners, wire, springs, household articles and other metal-intensive products from 2028.
The expansion is not yet law. The European Commission presented its proposal in December 2025 under legislative file 2025/0419(COD). The Council of the European Union adopted its position in June 2026, while the European Parliament approved first-reading amendments in September, supporting a broader downstream scope in several areas than the Commission originally proposed. The file is now proceeding through interinstitutional negotiations.
Closing Carbon Leakage Risks Further Down the Supply Chain
The policy objective is to prevent carbon leakage from shifting further along the manufacturing value chain. If CBAM increases the cost of imported steel while leaving steel-intensive finished products outside the mechanism, manufacturers could potentially move fabrication abroad and export the completed components to the EU without an equivalent carbon adjustment.
Extending CBAM to selected downstream products would address this potential gap by bringing additional stages of metal processing within the mechanism’s scope.
Implications for Serbian and Regional Exporters
For Serbia and other Southeast European manufacturing hubs, the legislative file could have significant commercial implications. Exporters of fabricated metal products, fasteners, wire, components and machinery parts may move from being indirectly affected by the cost of steel and aluminium to supplying goods directly covered by CBAM.
The European Commission’s latest technical Q&A illustrates the potential complexity of compliance. Steel and aluminium transformation processes are subject to detailed system boundaries, precursor emissions may require weighted-average calculations, and supplier-specific emissions values depend on evidence that the relevant input materials were used in the production process.
Carbon Data Systems Need Early Preparation
Downstream manufacturers should not wait for changes to customs classifications before developing the necessary data systems. Procurement records, enterprise resource planning (ERP) systems, warehouse traceability, metering and supplier contracts may all need to support reliable carbon information linked to production batches and input materials.
EU buyers could begin introducing these requirements ahead of the proposed implementation date. Long-term sourcing contracts signed in 2027 may allocate future CBAM costs and require emissions data even if the expanded scope only takes effect in 2028.
Traceability Could Become a Competitive Advantage
The proposed expansion creates a distinction between suppliers that view downstream CBAM primarily as a future cost and those that treat it as an extension of product and supply-chain traceability.
For manufacturers exporting metal-intensive goods to the EU, preparing emissions data, documenting precursor use and aligning contractual requirements with emerging CBAM obligations could become increasingly important before the final legislation takes effect.
