The European Union is negotiating an extension of CBAM to cover additional downstream products that use steel and aluminium. The scope under discussion includes components, machinery and other manufactured goods. The changes are expected to affect procurement contracts, supplier selection and factory investment decisions ahead of the planned start date.
As of 12 October 2026, the expansion remains a legislative proposal. The European Commission has proposed extending CBAM to additional downstream products from 1 January 2028. The Council of the EU adopted its negotiating position in June, followed by the European Parliament in September. Negotiators are now working on the final product list and detailed provisions.
Commission proposal and changes during negotiations
The Commission’s original proposal identified 180 additional product categories. Those categories were described as having an average steel and aluminium content of 79%. The selected imports were estimated at about 15% of the volume of goods already covered by CBAM but 53% of their import value.
The figures presented with the proposal indicate a move into higher-value manufacturing rather than an increase limited to additional volumes of basic metals. During the legislative process, the potential scope expanded further. An October notice from the Office of the United States Trade Representative (USTR) described the Council’s position as adding more than 300 products. It also described the Parliament’s position as adding approximately 400 products.
The USTR notice figures reflect competing negotiating positions rather than a final list of products subject to CBAM. The institutions must still agree on which downstream categories will be included. Until those talks conclude, companies do not have a definitive perimeter for compliance obligations.
Competitive effects for finished-goods producers and component suppliers
The proposed downstream changes are aimed at addressing a potential imbalance between European manufacturers and overseas producers of finished goods. EU companies using steel and aluminium that already face European carbon costs can encounter competition from imported finished products. In such cases, metal inputs could attract CBAM obligations if those inputs were imported separately.
The mechanism is intended to reduce incentives to shift additional processing outside the EU solely to avoid carbon-related costs linked to covered metal inputs. For component suppliers, the proposal could affect purchasing decisions and how customers compare production locations. A lower factory-gate price may be offset by higher assessed carbon liability or by costs tied to rebuilding emissions evidence used in product calculations.
European buyers may seek longer-term supply agreements with manufacturers capable of identifying metal sources. Buyers may also require traceability for relevant precursor materials and access to reliable emissions data. Suppliers lacking adequate records could face greater uncertainty when customers compare offers or negotiate contract terms.
Compliance timelines and preparation for 2028 implementation
Manufacturers evaluating capital expenditure are expected to distinguish between existing CBAM obligations and potential exposure under the proposed downstream expansion. A factory producing goods outside the current scope would face a different immediate compliance position than a company already exporting covered products such as certain metal structures or fasteners.
The final downstream product list is not expected to match the Commission’s original proposal. The eventual scope will depend on negotiations between EU institutions, including agreement on both product coverage and detailed provisions. Even so, the proposed 2028 implementation date carries commercial implications before any additional statutory charge takes effect.
Procurement contracts negotiated during the legislative period may extend beyond 2028. Qualifying new suppliers, setting up traceability procedures and building emissions-data systems can require substantial preparation time. Manufacturers therefore need to identify which products could fall within the expanded scope and determine how much relevant steel and aluminium they contain.
Contract terms for emissions data and future carbon-cost allocation
The final negotiations will define the legal perimeter of any expanded mechanism, but companies entering multi-year supply agreements face practical questions about cost responsibility if their products become covered. Contract provisions can address responsibility for emissions documentation, supplier cooperation and data corrections. They can also specify how future CBAM-related costs are allocated between buyers and suppliers.
For component manufacturers, demonstrating the origin and emissions characteristics of metal inputs could become part of supplier qualification requirements. While the proposed expansion is not yet law, its potential reach is already influencing how companies assess procurement choices, investment plans and long-term pricing risks across supply chains.