The European Union’s proposed expansion of the Carbon Border Adjustment Mechanism (CBAM) could bring a wider range of steel- and aluminium-intensive manufactured goods within the border-carbon framework from 1 January 2028. Fasteners, wire products, springs and related fabricated-metal goods are among the product categories at the centre of the downstream expansion debate.
For manufacturers, distributors and EU importers, the proposed changes could shift CBAM from an issue managed primarily through upstream steel suppliers to a direct compliance concern for downstream businesses, including small and medium-sized enterprises (SMEs). However, the final product scope remains under negotiation, and the proposed changes must be distinguished from the rules currently governing imports.
Legislative negotiations will determine the final product scope
The European Commission has proposed extending CBAM to a defined group of downstream goods containing significant amounts of steel and aluminium, with the extension intended to begin on 1 January 2028. The Council and European Parliament have established broader negotiating positions, with Parliament supporting a substantially larger list of downstream products.
The final scope has not yet been agreed. Individual Combined Nomenclature (CN) codes should therefore not be treated as definitively covered until the amending legislation is adopted.
Manufacturers need to distinguish between the existing legal framework for 2026 imports and the potential requirements under the proposed reform. The Commission proposal and the positions adopted by the Council and Parliament can inform scenario analysis and future contract drafting, but they should not be applied to current declarations as though the proposed extension were already in force.
A two-scenario planning model can help companies prepare for both the existing rules and a potential expansion. This allows businesses to develop data-collection systems and optional contractual provisions without basing current compliance decisions on legislation that remains under negotiation.
Material traceability will be central to downstream compliance
If the proposed expansion brings additional manufactured products into CBAM, fastener, wire and spring producers will need to connect their steel inputs to the finished goods they export. Bills of materials, production yields and manufacturing records can establish the relationship between precursor consumption and the finished product’s CN classification.
Suppliers will need to provide the emissions information required for covered precursors. Where materials from several sources are combined, manufacturers will need a defensible method for averaging or segregating emissions data that complies with the final applicable rules.
The compliance requirements for a downstream manufacturer differ from those of a steel mill. A fastener or spring producer may have relatively modest direct emissions while much of the product’s embedded carbon originates in steel rod, wire or other incoming materials.
Consequently, supplier emissions data, material traceability and accurate product classification could become more important than a complex inventory of the downstream factory’s combustion sources.
Verified precursor data could influence sourcing and margins
An extension of CBAM to downstream goods could affect sourcing decisions across European industrial supply chains. EU buyers may favour suppliers that provide verified precursor emissions data and more predictable information about potential CBAM costs, while manufacturers dependent on inputs with limited emissions documentation could face a disadvantage where applicable default values produce less favourable results.
These differences may be particularly relevant for high-volume, low-margin products such as fasteners, where relatively small changes in embedded emissions can influence commercial calculations.
The distinction between verified actual emissions and default values also has financial implications under the definitive regime. Default-value mark-ups increase through the phase, while reliable actual data can reflect the characteristics of cleaner feedstock or production. Suppliers able to quantify the resulting cost difference in euros may be better positioned to support pricing discussions and long-term supply agreements than businesses relying on general low-carbon claims.
The commercial impact will depend on the final legislation and the applicable calculation rules. Until those are established, companies should treat potential cost differences as scenarios rather than confirmed liabilities.
Western Balkan manufacturers face an extended preparation timeline
Serbia, Bosnia and Herzegovina, and North Macedonia have metal-processing sectors supplying European automotive, construction and machinery customers. Manufacturers in these markets should monitor the proposed 2028 extension because preparing supplier data, product classifications and production records may require substantial lead time.
Supplier governance will remain an important part of the monitoring, reporting and verification (MRV) process. Purchase contracts should identify the producing installation, reporting period, emissions-data format, verification requirements and procedures for correcting information.
Changes to a supplier’s production site, manufacturing route or precursor can alter the emissions value associated with a product. If those changes are not communicated before commercial terms are agreed, downstream manufacturers may face unexpected differences in their eventual CBAM exposure.
Contractual notification requirements can therefore help manage both compliance and carbon-cost risks.
CN-code screening can support early preparation
Manufacturers should screen their export CN codes against the product lists contained in the Commission proposal and the negotiating positions of the Council and Parliament. This can help identify products with a higher potential likelihood of inclusion and prioritise the collection of precursor emissions data.
The objective is to prepare for possible legislative changes without prematurely treating proposed product categories as covered goods under current law.
Companies should integrate this preparation with their existing purchasing, production, customs and finance records. A decision file should connect the relevant CN code, precursor, production-process boundary, material records and emissions information, while identifying responsibility for approving assumptions and documenting fallback treatments where preferred data cannot be substantiated.
Using the same underlying records for operational management and compliance preparation can make it easier to adapt when the final product list, calculation methodology or other legal requirements are established. It also provides a more reliable basis for supplier negotiations and future cost assessments.
The proposed downstream expansion could bring CBAM considerations directly into factories that have traditionally regarded carbon-border compliance as an issue for their steel suppliers rather than their own manufactured products.
