The European Union is pursuing an extension of the Carbon Border Adjustment Mechanism (CBAM) beyond primary steel and aluminium to selected finished products. The scope under discussion could include fasteners, wire, springs, household articles and other metal-intensive goods starting in 2028. The proposal is still under legislative development.
Legislative timeline for the downstream CBAM proposal
The European Commission presented its CBAM expansion proposal in December 2025 under legislative file 2025/0419(COD). The Council of the European Union adopted its position in June 2026. The European Parliament approved first-reading amendments in September, supporting a broader downstream scope in several areas than the Commission originally proposed.
The legislative file is now moving through interinstitutional negotiations. No final legal status is indicated for the downstream expansion at this stage. The discussed start date for the expanded coverage remains 2028.
Rationale to address carbon leakage along metal supply chains
The policy objective described for the expansion is to prevent carbon leakage from shifting further along the manufacturing value chain. The concern is that if CBAM raises the cost of imported steel while steel-intensive finished products remain outside the mechanism, fabrication could be moved abroad. Completed components could then be exported to the EU without an equivalent carbon adjustment.
Bringing selected downstream products into CBAM is intended to close this gap by including additional stages of metal processing within the mechanism’s scope. The approach targets further processing steps rather than only upstream materials.
Potential effects on Serbian and regional exporters
For Serbia and other Southeast European manufacturing hubs, the legislative file could affect commercial positioning for metal-intensive exports. Exporters of fabricated metal products, fasteners, wire, components and machinery parts may shift from indirect exposure through steel and aluminium costs to supplying goods directly covered by CBAM.
The European Commission’s technical Q&A highlights compliance complexity for transformation activities. It notes that steel and aluminium transformation processes involve detailed system boundaries, precursor emissions may require weighted-average calculations, and supplier-specific emissions values depend on evidence that relevant input materials were used in production.
Data systems and contractual requirements ahead of 2028
Downstream manufacturers are advised not to wait for changes to customs classifications before building carbon data systems. Procurement records, enterprise resource planning (ERP) systems, warehouse traceability, metering and supplier contracts may be needed to support carbon information tied to production batches and input materials.
EU buyers could introduce these requirements before implementation. Long-term sourcing contracts signed in 2027 may allocate future CBAM costs and require emissions data even if expanded coverage takes effect in 2028.
Traceability expectations for suppliers of metal-intensive goods
The proposed expansion is described as creating a distinction between suppliers treating downstream CBAM mainly as a future cost and those treating it as part of product and supply-chain traceability. For manufacturers exporting metal-intensive goods to the EU, preparing emissions data and documenting precursor use may become increasingly important before final legislation takes effect.
Aligning contractual requirements with emerging CBAM obligations is also highlighted as relevant for exporters supplying goods that fall within the expanded downstream scope.