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 adopted by the Council and amendments approved by the European Parliament envisage adding hundreds of downstream products. The expansion could bring fabricated metals, industrial components and other manufactured goods within the system from 1 January 2028.
The legislative proposal is identified as 2025/0419(COD) and was introduced by the European Commission. It targets 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 forms of avoidance.
The legislation has not yet been adopted. The European Parliament approved amendments on 15 September 2026 and returned the file for interinstitutional negotiations after the Council adopted its position in June 2026. The next step is the trilogue process, where institutions must reconcile their differences before a final regulation can enter into force.
Council and Parliament positions differ on number of downstream products
The scale of the proposed product expansion differs 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 reported 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 precise range of products are expected to depend on negotiations and the definitive product list. Until then, companies are not working from a final legal determination of which goods will be covered.
For manufacturers in Europe, the proposed changes are intended to address incentives to import finished goods instead of 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.
Serbia and Southeast Europe could face supply-chain adjustments
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.
The timing 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 eventual regulatory scope.
The precise impact on individual manufacturers cannot be established until institutions agree on final product coverage. Neither the Council’s position nor the European Parliament’s amendments should be treated as adopted legislation. Exposure assessments therefore remain contingent on outcomes of interinstitutional talks.
Downstream inclusion would expand emissions-data obligations
Including additional manufactured goods would affect what downstream producers must obtain from suppliers. Manufacturers could need verified precursor emissions data from steel and aluminium suppliers. They may also require documented allocation of emissions between production lines.
The proposal also points to contractual rights that would allow access to information required by EU customers. Procurement arrangements would therefore become more closely connected to CBAM compliance requirements for manufacturers selling into the EU market. Companies would need to check whether existing supplier agreements provide sufficient access to emissions information for covered products.
Firms may also need to review enterprise resource planning records and emissions-allocation systems. Adjustments would depend on both the final regulation and which product categories ultimately fall within scope. The data requirements would follow from how downstream coverage is defined in the final act.
Final CN list remains central for 2028 implementation
The negotiations leave uncertainty over how extensive downstream expansion will be once implemented. 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 1 January 2028 extension is described as a further 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. It will also shape which parts of European and international manufacturing supply chains prepare for additional carbon-accounting obligations.