The European Union’s proposed expansion of the Carbon Border Adjustment Mechanism (CBAM) would broaden the range of steel- and aluminium-intensive manufactured goods covered by the border-carbon framework starting 1 January 2028. The Commission proposal targets a defined group of downstream products, with fasteners, wire products, springs and related fabricated-metal goods included in the downstream expansion debate.
For manufacturers, distributors and EU importers, the changes could move CBAM compliance from a focus on upstream steel suppliers to a direct compliance issue for downstream businesses, including small and medium-sized enterprises. The final product scope remains under negotiation, and the proposed extension is distinct from the rules currently governing imports.
Legislative negotiations shape which downstream products are covered
The European Commission has proposed extending CBAM to downstream goods containing significant amounts of steel and aluminium, with implementation planned for 1 January 2028. The Council and European Parliament have set broader negotiating positions, with Parliament supporting a substantially larger list of downstream products.
The final scope has not been agreed, so individual Combined Nomenclature (CN) codes should not be treated as definitively covered until amending legislation is adopted. Manufacturers are therefore expected to distinguish between the existing legal framework for 2026 imports and any potential requirements arising from the proposed reform.
The Commission proposal and the Council and Parliament positions can be used for scenario analysis and future contract drafting. They should not be applied to current declarations as if the proposed extension were already in force.
A two-scenario planning model is described as a way for companies to prepare for both existing rules and a potential expansion. This approach is intended to support development of data-collection systems and optional contractual provisions without basing current compliance decisions on legislation that remains under negotiation.
Downstream compliance depends on linking inputs to exported products
If additional manufactured products are brought into CBAM under the proposed expansion, fastener, wire and spring producers would need to connect their steel inputs to finished goods exported from the EU. Bills of materials, production yields and manufacturing records would be used to establish how precursor consumption relates to the finished product’s CN classification.
Suppliers would be required to provide emissions information for covered precursors. Where materials from multiple sources are combined, manufacturers would need a defensible method for averaging or segregating emissions data that complies with the final applicable rules.
The compliance obligations for downstream manufacturers would differ from those of a steel mill. A fastener or spring producer may have relatively modest direct emissions while much of the embedded carbon originates in steel rod, wire or other incoming materials.
As a result, supplier emissions data, material traceability and accurate product classification could become more important than maintaining a detailed inventory of combustion sources within the downstream factory.
Verified precursor emissions data can affect sourcing costs
An extension of CBAM to downstream goods could influence sourcing decisions across European industrial supply chains. EU buyers may prefer suppliers that provide verified precursor emissions data and more predictable information about potential CBAM costs.
Manufacturers dependent on inputs with limited emissions documentation could face disadvantages if applicable default values produce less favourable results. The differences may be particularly relevant for high-volume, low-margin products such as fasteners, where changes in embedded emissions can affect commercial calculations.
The distinction between verified actual emissions and default values also has financial implications under the definitive regime. Default-value mark-ups increase through the phase, while reliable actual data can reflect cleaner feedstock or production characteristics.
Suppliers able to quantify resulting cost differences in euros may be better positioned to support pricing discussions and long-term supply agreements than businesses relying on general low-carbon claims. Until final legislation and calculation rules are established, companies are expected to treat potential cost differences as scenarios rather than confirmed liabilities.
Western Balkans manufacturers may need longer lead times for MRV
Serbia, Bosnia and Herzegovina, and North Macedonia have metal-processing sectors supplying European automotive, construction and machinery customers. Manufacturers in these markets are advised to monitor the proposed 2028 extension because preparing supplier data, product classifications and production records may require substantial lead time.
Supplier governance is described as an important element of monitoring, reporting and verification (MRV). Purchase contracts should specify details including the producing installation, reporting period, emissions-data format, verification requirements and procedures for correcting information.
Changes at a supplier’s production site, manufacturing route or precursor can alter the emissions value associated with a product. If such changes are not communicated before commercial terms are agreed, downstream manufacturers may face unexpected differences in their eventual CBAM exposure.
Contractual notification requirements are therefore presented as a way to manage both compliance obligations and carbon-cost risks linked to supplier changes.
CN-code screening supports preparation ahead of any final product list
Manufacturers are advised to screen export CN codes against product lists contained in the Commission proposal and in negotiating positions held by the Council and Parliament. This screening is intended to identify products with a higher likelihood of inclusion and prioritise collection of precursor emissions data.
The stated objective is preparation for possible legislative changes without prematurely treating proposed product categories as covered goods under current law. Companies are expected to integrate this preparation with existing purchasing, production, customs and finance records.
A decision file is described as connecting relevant CN code information with precursor details, production-process boundaries, material records and emissions information. It should also identify responsibility for approving assumptions and documenting fallback treatments where preferred data cannot be substantiated.
Using shared underlying records for operational management alongside compliance preparation is described as helping adaptation when final product lists or calculation methodologies are established. It is also presented as providing a more reliable basis for supplier negotiations and future cost assessments.
The proposed downstream expansion could bring CBAM considerations directly into factories that have traditionally treated carbon-border compliance as an issue handled by their steel suppliers rather than by their own manufactured products.