The European Union is negotiating an extension of the Carbon Border Adjustment Mechanism (CBAM) to selected downstream steel and aluminium products, after the European Commission proposed roughly 180 additional product types in December 2025. The proposed start date is 1 January 2028, but the expansion has not been adopted as law.
The proposal is intended to prevent manufacturers from avoiding carbon costs by importing finished goods instead of basic materials. Under the current system, an importer of a covered steel input may face CBAM obligations, while an imported finished product with similar metal content may fall outside the covered product-code list. That difference could encourage production to move to non-EU assembly sites rather than reduce global emissions.
Extending coverage is intended to narrow the difference in treatment between covered metal inputs and downstream imports, though its scope and implementation remain disputed. Until new legislation is agreed and takes effect, the current Annex I classification remains the binding basis for declarations.
Negotiations leave product scope unresolved
The Council adopted its negotiating position in June 2026, followed by the European Parliament in September. The Council supports expanding CBAM coverage but differs with Parliament on the product-code list and implementation. Parliament approved its position on 15 September 2026 by 464 votes to 50, with 159 abstentions; its amendments sought broader downstream coverage and additional anti-circumvention measures.
The first political trilogue took place on 20 October 2026. Negotiators still have to address metal scrap, a threshold for some aluminium products, online platforms and default values. Another round is scheduled for 30 November 2026.
Companies importing machinery, components, household products or other steel- and aluminium-intensive goods should monitor the detailed product-code list rather than assume their entire portfolios will be covered. The treatment of precursors and metal scrap is particularly relevant to firms making products with recycled content.
Commercial forecasts should compare importing metal into an EU plant for processing with importing a downstream product made outside the EU. Both models should be assessed for materials, energy, transport, customs treatment, carbon evidence and the final buyer. The legislative outcome may influence investment locations and supply contracts, but predictions about specific company winners or losses must await the final text and product-level trade data.