Negotiations on expanding the EU Carbon Border Adjustment Mechanism (CBAM) to additional manufactured goods could change the carbon-cost exposure of industrial supply chains from 2028. The scope under discussion is linked to the precise customs classification of each product, which determines whether imports fall within the rules. Machinery components, metal products and household goods are among the categories cited in the talks, with implications for European manufacturers and overseas suppliers.
The legislative proposal is 2025/0419(COD), tied to COM(2025)989, which the European Commission presented on Dec. 17, 2025. The proposal would extend CBAM to selected steel- and aluminium-intensive downstream products and includes measures intended to prevent circumvention. It also forms part of ongoing institutional negotiations over how the mechanism should apply to additional product coverage.
Institutional positions on downstream product lists
The Commission’s initial proposal covered approximately 180 products. A Council negotiating mandate dated June 12 broadened the proposed scope, while the European Parliament’s position from Sept. 15 supported a substantially longer list described in parliamentary material as covering 457 products. These figures reflect negotiating positions held by EU institutions rather than a final legally binding product list.
The discussion also highlights differences in how costs may be distributed across supply chains under an expanded mechanism. EU processors buying steel and aluminium may face carbon-related costs through their inputs, while foreign manufacturers exporting certain finished products made from similar materials could remain outside CBAM. Machinery, automotive and equipment producers are among those raising concerns about additional input costs and administrative requirements for bringing more components into the system.
Why CN codes, not broad categories, determine coverage
The number of products referenced by EU institutions does not by itself establish the eventual reach of CBAM. The proposed scope must be checked against the Combined Nomenclature (CN) at the level of each individual customs entry rather than inferred from broad industry descriptions such as automotive, machinery or aluminium products.
A single six-digit Harmonized System heading can include multiple eight-digit CN subheadings that may receive different regulatory treatment. An entry covering an entire heading is therefore not equivalent to one specifying only a particular CN8 code. A product also does not automatically become subject to CBAM solely because its manufacture involves a metal-intensive industry or uses limited quantities of steel or aluminium.
Institutional texts also differ in how they count products and legislative entries. One line may cover an entire customs heading, while another identifies individual CN8 subcodes, meaning that references to 180, 200 or 457 items cannot be treated as a direct measure of how many import shipments would become subject to CBAM. Customs specialists are expected to reconcile each proposed provision with the applicable year’s Combined Nomenclature, including residual “other” categories and relevant exclusions.
Scrap treatment, anti-circumvention and mass thresholds
The proposals address 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 toward EU-bound goods while higher-emission production continues elsewhere. These measures could require additional evidence for product-and-origin combinations considered at higher risk.
The design of those safeguards is also expected to account for legitimate recycling practices and supply chains where multiple installations contribute materials or intermediate products to a finished good. Another unresolved issue is the annual 50-tonne mass-based threshold currently set for relevant CBAM imports. The European Parliament has supported reducing the threshold for aluminium to 5 tonnes, but that position remains part of negotiations rather than an operative change companies can apply immediately.
Factories, distributors and importers are therefore expected to continue checking thresholds and applicable exclusions against consolidated rules governing each shipment. Assuming that an aluminium threshold change proposed by Parliament is already in force could lead to incorrect assessments of obligations under current arrangements.
Electricity emissions methodology affects regional exporters
The Commission’s December proposal includes changes to how emissions associated with electricity are calculated. This issue is relevant for exporters in Serbia, Montenegro, Türkiye and other interconnected electricity markets where electricity-related emissions treatment can affect assessments for industrial products.
Proposed changes to default electricity factors and conditions for using actual emissions must be distinguished from stricter requirements set out in Annex IV. Those requirements cover matters including contracts, network congestion, generation intensity, hourly nominations and independent verification.
The proposals also indicate that any relaxation or adjustment would not retroactively make a previously non-compliant electricity supply chain compliant. Exporters and importers are expected to assess existing arrangements under rules currently applicable while monitoring how legislative negotiations could alter the methodology.
Trade data needs CN8 detail and origin exemptions
Even if expanded coverage begins in 2028, trade analysis based only on EU imports under HS chapters 72, 73 and 76 would not capture full commercial impact. A robust assessment requires 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.
Origin exemptions under current CBAM legislation also affect calculations. Norway, Iceland, Liechtenstein and Switzerland have relevant exemptions, so trade from those countries must be separated when estimating potential liability under an expanded mechanism.
Import movements are further 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 changes in EU orders may be responding to automotive demand rather than carbon-cost changes, while a low customs unit value recorded by a German importer may reflect different product mix rather than cheaper emissions-intensive steel.
Compliance depends on product-level evidence across supply chains
The commercial effects of expanded coverage may differ between companies even within the same country or industrial sector. A lower-emission metal processor in the Balkans could benefit if rules increase the relative cost of higher-emission finished goods shipped from more distant markets. The same supplier could lose sales if its own covered products face inadequate emissions-verification records.
An EU equipment manufacturer could see different outcomes across product lines depending on procurement costs for components and how coverage applies. Assessments based on national rankings or broad industrial classifications risk overlooking these differences because the relevant unit is the individual production and import chain. That unit includes the product’s customs code, origin, materials and emissions records.
The EU institutions have begun negotiations while the compliance boundary remains unsettled. Exporters can prepare by classifying current products, mapping them against competing proposed CN lists and retaining factory-level materials and emissions documentation that can be audited.
The timing of commercial agreements is also relevant because contracts signed before agreement on a final product list may need provisions on allocation of future CBAM liability between suppliers and buyers. The eventual scope of the mechanism could determine not only which goods face additional obligations but also which party bears associated carbon costs under existing supply arrangements.