BRUSSELS, Oct. 22, 2026 – Negotiations over expanding the EU’s Carbon Border Adjustment Mechanism (CBAM) to additional manufactured goods could reshape the carbon-cost exposure of industrial supply chains from 2028, with the precise customs classification of each product determining which imports may fall within the rules. Machinery components, metal products and household goods are among the categories under discussion, with implications for European manufacturers and overseas suppliers.
The legislative proposal, 2025/0419(COD), relates to COM(2025)989, which the European Commission presented on Dec. 17, 2025. It would extend CBAM to selected steel- and aluminium-intensive downstream products and reinforce measures intended to prevent circumvention.
The Commission’s initial proposal covered approximately 180 products. The Council’s negotiating mandate of June 12 broadened the proposed scope, while the European Parliament’s position of Sept. 15 supported a substantially longer list, described in parliamentary material as covering 457 products. These figures represent institutional negotiating positions; none should be treated as the final, legally binding product list.
The debate reflects a potential imbalance in the existing mechanism. EU processors purchasing steel and aluminium may incur carbon-related costs through their inputs, while foreign manufacturers exporting certain finished products made from similar materials may remain outside CBAM. Extending coverage is intended to reduce incentives to relocate processing outside the EU. Machinery, automotive and equipment producers, however, face concerns about additional input costs and the administrative burden of bringing more components into the system.
Final coverage depends on individual customs classifications
The number of products cited by EU institutions does not, by itself, establish the mechanism’s eventual reach. The proposed scope must be checked against the Combined Nomenclature (CN) at the level of the individual customs entry, rather than inferred from broad industry descriptions such as automotive, machinery or aluminium products.
A single six-digit Harmonized System (HS) heading can contain several eight-digit CN subheadings, which may receive different regulatory treatment. An entry covering an entire heading is therefore not equivalent to one that specifies only a particular CN8 code. Nor does a product automatically become subject to CBAM simply because its manufacture involves a metal-intensive industry or a limited quantity of steel or aluminium.
The institutional texts also differ in how they count products and legislative entries. One line may encompass an entire customs heading, while another identifies individual CN8 subcodes. Consequently, announcements referring to 180, 200 or 457 items cannot independently establish the volume of imports that would become subject to CBAM.
Customs specialists will need to reconcile each proposed provision with the applicable year’s Combined Nomenclature, including residual “other” categories and relevant exclusions. Only then can they identify which shipments might newly face reporting, verification and certificate obligations under a particular negotiating scenario.
Scrap accounting and anti-circumvention remain disputed
The proposals address the treatment of scrap and upstream production inputs, including a Commission initiative to recognise certain pre-consumer scrap in precursor accounting. The Commission has also proposed stronger safeguards against resource shuffling, under which lower-emission output is directed towards EU-bound goods while higher-emission production continues elsewhere.
These measures could require additional evidence for product-and-origin combinations considered at higher risk. Their design must also account for legitimate recycling practices and supply chains in which multiple installations contribute materials or intermediate products to the finished good.
Another unresolved issue is the annual 50-tonne mass-based threshold currently established for relevant CBAM imports. The European Parliament has supported reducing the threshold for aluminium to 5 tonnes. That position remains part of the legislative negotiations, rather than an operative change that companies can already apply.
Factories, distributors and importers should therefore continue to check the threshold and applicable exclusions against the consolidated rules governing each shipment. Changing compliance procedures on the assumption that Parliament’s proposed aluminium threshold is already in force could produce an incorrect assessment of obligations.
Electricity methodology has implications for neighbouring markets
The Commission’s December proposal also includes changes to the methodology for calculating emissions associated with electricity. This issue is relevant to exporters in Serbia, Montenegro, Türkiye and other interconnected electricity markets, where the treatment of electricity-related emissions can influence the assessment of industrial products.
Proposed changes to default electricity factors and the conditions under which actual emissions may be used must be distinguished from the stricter requirements currently set out in Annex IV. Those requirements address matters including contracts, network congestion, generation intensity, hourly nominations and independent verification.
Any proposed relaxation or adjustment would not retroactively make a previously non-compliant electricity supply chain compliant. Exporters and importers must assess existing arrangements against the rules currently applicable, while separately monitoring how the legislative negotiations may change the methodology.
Import data must separate CBAM exposure from other market drivers
Even if an expanded mechanism begins in 2028, trade analysis based solely on EU imports under HS chapters 72, 73 and 76 would not identify the full commercial impact. A robust assessment needs the proposed CN8 code for each product, import values and net mass by country of origin, comparisons with the previous month and year, and estimates of embedded emissions.
Existing origin exemptions also matter. Norway, Iceland, Liechtenstein and Switzerland have relevant exemptions under current CBAM legislation, so trade from those countries must be separated from the calculation of potential liability.
Import movements are also influenced by factors unrelated to carbon-border charges. European demand, trade safeguards, Chinese industrial pricing, transport costs, inventory levels, sanctions and exchange-rate movements can all affect trade flows. A Serbian metal-component supplier experiencing a change in EU orders, for example, may be responding to automotive demand rather than a change in carbon costs. Similarly, a low customs unit value recorded by a German importer may reflect a different product mix rather than cheaper, emissions-intensive steel.
Supply-chain decisions require product-level evidence
The commercial effects of expanded coverage may vary even between companies operating in the same country or industrial sector. A lower-emission metal processor in the Balkans could benefit if the rules increase the relative cost of higher-emission finished goods shipped from more distant markets. The same supplier could lose sales if its own products become covered and its emissions-verification records are inadequate.
An EU equipment manufacturer could receive greater protection in one product line while facing higher procurement costs for components in another. Assessments based on national rankings or broad industrial classifications risk overlooking these differences. The relevant unit of analysis is the individual production and import chain, including the product’s customs code, origin, materials and emissions records.
The EU institutions have begun negotiations, but the eventual compliance boundary remains unsettled. Exporters can prepare by classifying their current products, mapping them against the competing proposed CN lists and retaining factory-level materials and emissions documentation that can be audited.
The timing of commercial agreements is also relevant. Contracts signed before the final product list is agreed may need to address how any future CBAM liability will be allocated between suppliers and buyers. The eventual scope of the mechanism could determine not only which goods face additional obligations, but also which party bears the associated carbon costs under existing supply arrangements.
