The European Union is negotiating an expansion of its Carbon Border Adjustment Mechanism (CBAM) that could extend carbon-border obligations well beyond primary steel and aluminium. Positions adopted by the Council and amendments approved by the European Parliament envisage adding hundreds of downstream products, potentially bringing fabricated metals, industrial components and other manufactured goods within the system from 1 January 2028.
The legislative proposal, identified as 2025/0419(COD), was introduced by the European Commission to address the risk of carbon leakage shifting from basic materials to finished products. It also includes proposed anti-circumvention measures targeting resource shuffling and other forms of avoidance.
The legislation has not yet been adopted. The European Parliament approved amendments on 15 September 2026 and returned the file for interinstitutional negotiations, following the Council’s adoption of its position in June 2026. The next stage is the trilogue process, in which the institutions must reconcile their differences before a final regulation can enter into force.
Council and Parliament support wider product coverage
The scale of the proposed expansion differs significantly between the negotiating positions. According to an October consultation notice from US trade authorities summarising the EU process, the Council’s position would add more than 300 products, while the Parliament’s position would extend coverage to approximately 400 products beyond the existing CBAM product universe.
These figures indicate a broader scope than the Commission’s initial approach, which focused on a more limited group of downstream manufactured metals. The final number and precise range of products will depend on the outcome of negotiations and the definitive product list.
For European manufacturers, the proposed changes are intended to address incentives to import finished goods instead of primary metals subject to carbon pricing. For manufacturers outside the EU, the potential extension could bring fasteners, wire products, fabricated steel and aluminium articles, components and other industrial goods into the carbon-border framework.
Southeast European manufacturers face potential supply-chain changes
Serbia and the wider Southeast European manufacturing base are exposed because companies in the region export both primary metals and downstream manufactured products to the European Union.
Under the proposed expansion, a manufacturer that purchases steel already covered by CBAM and processes it into a component currently outside the mechanism could see the finished product become subject to CBAM from 2028, depending on the final Combined Nomenclature (CN) product list.
The change would extend the relevance of carbon accounting beyond primary metal production to companies further along the manufacturing chain. Businesses supplying components and fabricated products to EU customers would need to determine whether their specific goods fall within the final scope of the regulation.
The precise impact on individual manufacturers cannot be established until the institutions agree on the final product coverage. Neither the Council’s position nor the Parliament’s amendments should be treated as adopted legislation.
Downstream coverage would extend emissions-data requirements
Including additional manufactured goods would also change the information that downstream producers need to obtain from their suppliers. Manufacturers could need verified precursor emissions data from steel and aluminium suppliers, documented allocation of emissions between production lines, and contractual rights allowing them to access information required by EU customers.
Procurement arrangements would consequently become more closely connected to CBAM compliance. Manufacturers would need to consider whether their existing supplier agreements provide sufficient access to emissions information for the products they sell into the EU market.
Companies may also need to review their enterprise resource planning (ERP) records and emissions-allocation systems to accommodate additional product categories and the associated data requirements. The necessary adjustments would depend on the final regulation and the products ultimately brought within its scope.
Final CN list remains critical for 2028 planning
The negotiations leave manufacturers facing uncertainty over the precise extent of the downstream expansion. Companies cannot assume that the product lists supported by either institution will become the final legal text, but postponing exposure assessments until adoption could leave limited time to revise supplier contracts, information systems and emissions-accounting procedures.
The proposed 1 January 2028 extension would mark a further stage in the development of EU CBAM, moving the regulatory perimeter beyond basic materials towards a wider range of industrial goods. The trilogue outcome will determine how many downstream products are included and which parts of European and international manufacturing supply chains must prepare for additional carbon-accounting obligations.
