EU negotiations on expanding the Carbon Border Adjustment Mechanism (CBAM) to additional manufactured goods could affect carbon-cost exposure for industrial supply chains starting in 2028. The outcome depends on how each product is classified for customs purposes, which determines whether imports fall within the mechanism. Categories cited in the talks include machinery components, metal products and household goods, with potential implications for European manufacturers and overseas suppliers.
The legislative proposal is 2025/0419(COD), linked to COM(2025)989, which the European Commission presented on Dec. 17, 2025. The proposal would extend CBAM to selected downstream products that are intensive in steel and aluminium inputs. It also includes measures intended to prevent circumvention.
Institutional lists under negotiation for downstream product coverage
The Commission’s initial CBAM extension proposal covered about 180 products. A Council negotiating mandate issued on June 12 broadened the proposed scope. The European Parliament’s position of Sept. 15 backed a substantially longer list described in parliamentary material as covering 457 products.
These figures reflect institutional negotiating positions rather than a final legally binding product list. The debate also highlights a potential imbalance in the current mechanism, where EU processors buying steel and aluminium inputs may face carbon-related costs while some foreign finished-product exports made from similar materials may remain outside CBAM. The stated aim of extending coverage is to reduce incentives to relocate processing outside the EU.
Concerns have also been raised by machinery, automotive and equipment producers about additional input costs and administrative requirements tied to bringing more components into the system. The final reach of any expanded CBAM coverage is therefore tied to how specific goods are treated under customs rules rather than to broad industry categories alone.
Why customs codes, not sector labels, determine whether CBAM applies
The number of products cited by EU institutions does not by itself establish how far the mechanism will extend. The proposed scope must be checked against the Combined Nomenclature (CN) at the level of each individual customs entry, rather than inferred from general descriptions such as automotive, machinery or aluminium products.
A single six-digit Harmonized System (HS) heading can include multiple eight-digit CN subheadings that may receive different regulatory treatment. As a result, an entry that covers an entire heading is not equivalent to one that specifies only a particular CN8 code. A product also does not automatically fall under CBAM solely because its production involves a metal-intensive industry or uses limited quantities of steel or aluminium.
The institutional texts also differ in how they count products and legislative entries. One line may cover an entire customs heading, while another may identify individual CN8 subcodes. Because of these differences, announcements referencing 180, 200 or 457 items cannot independently determine how many imports would become subject to CBAM.
Customs specialists are expected to reconcile each proposed provision with the applicable year’s Combined Nomenclature, including residual “other” categories and relevant exclusions. Only after that step can they identify which shipments might newly face reporting, verification and certificate obligations under a particular negotiating scenario.
Scrap treatment, anti-circumvention safeguards and the mass threshold
The proposals address scrap handling and upstream production inputs, including a Commission initiative to recognise certain pre-consumer scrap in precursor accounting. The Commission has also proposed stronger safeguards against resource shuffling. Under those safeguards, lower-emission output would be directed toward EU-bound goods while higher-emission production continues elsewhere.
These measures could require additional evidence for product-and-origin combinations considered at higher risk. Their design is also expected to account for legitimate recycling practices and supply chains where multiple installations contribute materials or intermediate products to a finished good.
An unresolved element is the annual mass-based threshold of 50 tonnes currently set for relevant CBAM imports. The European Parliament has supported reducing the threshold for aluminium to 5 tonnes. That position remains part of ongoing legislative negotiations rather than an operative change companies can apply immediately.
Factories, distributors and importers are therefore expected to continue checking thresholds and applicable exclusions against consolidated rules governing each shipment. Assuming that Parliament’s proposed aluminium threshold is already in force could lead to incorrect assessments of obligations.
Electricity emissions methodology changes affecting regional exporters
The Commission’s December proposal includes changes to how emissions associated with electricity are calculated. This issue is relevant for exporters in Serbia, Montenegro,