Hundreds of manufactured steel and aluminium products could enter the European Union’s Carbon Border Adjustment Mechanism (CBAM) from 2028, extending carbon-related trade obligations beyond basic materials to fabricated goods, components and selected finished products.
The proposed changes would affect supply chains serving construction, machinery, electrical equipment and metalworking, with implications for European manufacturers and overseas suppliers selling into the EU market.
The European Parliament adopted its negotiating position on 15 September 2026, recording 464 votes in favour, 50 against and 159 abstentions. The Council had adopted its position in June, leaving the two institutions to reconcile their approaches before the legislation can be finalised.
Parliament and Council advance competing expansion proposals
The scope of the proposed extension differs between the institutions. The European Commission initially put forward a more limited expansion, while the Council’s negotiating position would add more than 300 product categories and Parliament’s position would cover approximately 400, according to an October 2026 assessment by the US government.
Products identified for potential inclusion range from fasteners, wire and springs to household metal articles, alongside a wider selection of manufactured goods.
The proposals remain under negotiation. The final product list, anti-circumvention provisions and implementation arrangements have yet to be settled, and could change before the legislation is completed.
Downstream goods targeted to address gaps in carbon coverage
The proposed expansion addresses the difference in carbon obligations between imported basic materials and finished goods manufactured from those materials.
Under the existing scope, imported steel may be subject to CBAM while a finished product manufactured from that steel remains outside the mechanism. This creates the possibility for overseas manufacturers to relocate processing activities outside the EU and export finished components instead of the covered raw material.
European steel producers would continue to bear domestic emissions costs while competing against manufactured imports that do not face equivalent carbon obligations under CBAM.
Extending the mechanism further along the manufacturing chain is intended to reduce this imbalance by bringing additional products containing steel and aluminium within the carbon border framework.
Exporters across the Western Balkans and Asia face new data requirements
The potential changes are relevant to industrial suppliers in Serbia, Türkiye, China, India and the wider Western Balkans. Businesses exporting fabricated metal structures, electrical components, machinery parts and industrial assemblies to EU customers could need to establish more detailed emissions records.
Manufacturers using several steel or aluminium suppliers may have to collect information covering upstream production, individual manufacturing processes and the allocation of embedded emissions to specific products.
This would require emissions data to be traced through multiple stages of the supply chain, connecting raw-material producers with downstream manufacturers and European buyers.
The proposed requirements could therefore affect companies beyond primary steelmaking and aluminium production, including manufacturers whose finished goods incorporate materials supplied by several upstream producers.
Carbon intensity could influence procurement and investment
The financial impact would depend on the emissions associated with individual products and whether differences can be demonstrated under the applicable calculation methodology.
Manufacturers using lower-emission steel or recycled aluminium could gain a competitive advantage over businesses relying on carbon-intensive primary production, provided the emissions differences are recognised under the relevant rules.
For EU buyers, purchasing decisions could increasingly involve both the quoted price of a finished product and its associated carbon exposure. The proposed extension would bring this consideration into a wider range of industrial procurement decisions.
Export-oriented manufacturers may also face stronger incentives to invest in emissions monitoring systems, establish traceable raw-material supply chains and negotiate long-term purchasing agreements with lower-carbon producers.
The extent of these commercial and investment effects will depend on the final legislation, including which products are covered and how embedded emissions are calculated and allocated across manufactured goods.
