The European Union is negotiating an expansion of its Carbon Border Adjustment Mechanism (CBAM) that could extend carbon-border obligations beyond primary steel and aluminium. The positions taken by the Council and amendments approved by the European Parliament envisage adding hundreds of downstream products. If agreed, the changes could bring fabricated metals, industrial components and other manufactured goods into the system from 1 January 2028.
The legislative proposal is identified as 2025/0419(COD) and was introduced by the European Commission. It aims to address the risk of carbon leakage shifting from basic materials to finished products. The proposal also includes anti-circumvention measures aimed at resource shuffling and other avoidance practices.
The file has not yet been adopted. The European Parliament approved amendments on 15 September 2026 and returned the text for interinstitutional negotiations after the Council adopted its position in June 2026. The next stage is the trilogue process, where institutions must reconcile their differences before a final regulation can enter into force.
Council and Parliament positions differ on product coverage
The scale of the proposed expansion varies between negotiating positions. An October consultation notice from US trade authorities summarising the EU process says the Council’s position would add more than 300 products. It also reports that the Parliament’s position would extend coverage to approximately 400 products beyond the existing CBAM product universe.
The figures point to a broader scope than an earlier Commission approach focused on a more limited group of downstream manufactured metals. The final number and the precise range of products are expected to depend on the outcome of negotiations and the definitive product list. Until then, neither the Council’s position nor the Parliament’s amendments should be treated as adopted legislation.
For manufacturers within Europe, the proposed changes are intended to address incentives to import finished goods rather than primary metals subject to carbon pricing. For manufacturers outside the EU, the potential extension could bring fasteners, wire products, fabricated steel and aluminium articles, components and other industrial goods into the carbon-border framework.
Southeast Europe supply chains could face CBAM-related shifts
Serbia and the wider Southeast European manufacturing base are described as exposed because companies in the region export both primary metals and downstream manufactured products to the European Union. Under the proposed expansion, a manufacturer that buys steel already covered by CBAM and processes it into a component currently outside the mechanism could see that finished product become subject to CBAM from 2028. This would depend on the final Combined Nomenclature (CN) product list.
The change would extend carbon accounting relevance beyond primary metal production to companies further along manufacturing chains. Businesses supplying components and fabricated products to EU customers would need to determine whether their specific goods fall within the final scope of the regulation.
The precise effect on individual manufacturers cannot be established until institutions agree on final product coverage. The uncertainty applies because exposure assessments depend on what is ultimately included in the legal text rather than on negotiating positions alone.
Downstream inclusion would expand emissions data obligations
Including additional manufactured goods would affect what downstream producers need to obtain from suppliers. Manufacturers could require verified precursor emissions data from steel and aluminium suppliers, documented allocation of emissions between production lines, and contractual rights enabling access to information required by EU customers.
Procurement arrangements would become more closely connected to CBAM compliance requirements. Manufacturers would need to check whether existing supplier agreements provide sufficient access to emissions information for products sold into the EU market.
Companies may also need to review enterprise resource planning records and emissions-allocation systems to accommodate additional product categories and associated data requirements. The adjustments would depend on what is specified in the final regulation and which products are brought within scope.
Final CN list remains central for 2028 implementation
The negotiations leave manufacturers with uncertainty over how far downstream expansion will go. Companies cannot assume that product lists supported by either institution will become the final legal text. Delaying exposure assessments until adoption could reduce time available to revise supplier contracts, information systems and emissions-accounting procedures.
The proposed extension starting 1 January 2028 represents another stage in CBAM development, moving beyond basic materials toward a wider range of industrial goods. The trilogue outcome will determine how many downstream products are included and which parts of European and international manufacturing supply chains must prepare for additional carbon-accounting obligations.