The European Union is considering expanding the Carbon Border Adjustment Mechanism (CBAM) beyond basic metals to cover a wider set of downstream manufactured goods. The change would extend the policy’s scope to additional components and industrial equipment, affecting exporters and European buyers tied to established international supply chains.
In an impact assessment based on 2024 trade data, the European Commission estimated that exports covered under its “balanced expansion” option would total about €18 billion for China and €8 billion for Türkiye. The same assessment estimated comparable exposure of €6 billion for the United States, €5 billion for the United Kingdom, and €3 billion for Japan.
The figures are linked to an assessed policy option rather than actual 2026 import volumes, a final negotiated product list, or estimated CBAM payments. The Council and European Parliament have proposed broader product coverage, which could materially alter exposure for individual trading partners.
Estimated trade exposure under the Commission’s balanced expansion option
The Commission’s estimates are presented as coverage under the balanced expansion approach, using 2024 trade flows. For China, the assessed export coverage is approximately €18 billion, while Türkiye is estimated at about €8 billion.
Other trading partners included in the assessment show lower estimated coverage: €6 billion for the United States, €5 billion for the United Kingdom, and €3 billion for Japan. These estimates are not described as forecasts of CBAM liabilities or final import outcomes.
Because the product list could change through negotiations, exposure figures may shift depending on which downstream categories are ultimately included. The assessment therefore reflects scenario coverage rather than a confirmed implementation schedule or payment level.
China’s manufacturing scale and supplier switching costs
China’s position is described as reflecting the scale of its manufacturing supply to European markets. For EU importers, replacing an established component supplier may involve new tooling, technical qualification, and production trials.
The assessment indicates that these steps can add costs and create potential delays for buyers. It also notes that higher carbon-related costs could raise the price of Chinese components without immediately removing European demand.
Where suppliers have significant production capacity or specialised technical expertise, switching may be more complex than comparing quoted prices alone. The commercial impact is stated to depend on product characteristics, supplier capabilities, and how any additional CBAM liability affects total procurement costs.
Türkiye’s proximity and existing industrial relationships
Türkiye is described as having a different sourcing profile due to proximity to major EU markets and established industrial relationships with European customers. Shorter delivery routes and existing supplier networks can support continued purchasing as buyers reassess carbon-related costs.
The assessment states that these factors do not amount to a CBAM exemption. It also says they cannot automatically offset a higher emissions assessment tied to covered products.
The relative attractiveness of Turkish suppliers is presented as depending on combined production costs, logistics performance, emissions evidence, and any applicable CBAM liability. The outcome would therefore vary by product and supplier documentation.
Supplier-level emissions evidence versus country rankings
The exposure described for China and Türkiye is not uniform across all producers within either country. Different metal inputs, production routes, and manufacturing processes can lead to different recognised emissions even where suppliers operate in the same country or produce comparable products.
A country-level ranking may help identify where trade exposure could be concentrated. However, it cannot replace installation-level emissions evidence when buyers compare individual suppliers.
The assessment indicates that procurement decisions will increasingly require information linking finished products to relevant inputs and production processes. This includes connecting emissions claims to specific production installations rather than relying on broad geographic comparisons.
Potential exporter responses and documentation adjustments
The assessment outlines several possible responses by exporters facing additional requirements around emissions information. These include improving emissions documentation, negotiating allocation of added costs between suppliers and buyers, changing qualifying input sources, or investing in production efficiency.
It also notes that some exporters may seek alternative export markets. Whether sales can be redirected would depend on demand conditions, tariffs, and the cost of securing replacement customers.
Circumvention concerns and modelling landed costs in procurement
The assessment cautions that routing goods through another country should not be treated as a straightforward way to eliminate precursor emissions. Any revised supply chain must reflect genuine production activities and be supported by defensible records.
The proposed anti-circumvention provisions increase the importance of identifying the production installation associated with an emissions claim. It adds that changes in where final processing occurs do not by themselves establish that underlying metal or other relevant inputs have a different emissions profile.
For European procurement teams, it says the immediate priority is modelling supplier-specific landed costs alongside financial and operational consequences of switching. It also warns that broad assumptions about imports disappearing or market share shifting automatically provide a weak basis for sourcing decisions.
The proposed expansion could place established trade relationships under pressure, but headline export values alone do not determine outcomes. Exporters are expected to defend both price and emissions evidence for each affected product while European buyers assess whether alternative suppliers can meet comparable quality, capacity, reliability, and competitive total cost.