British manufacturers warned at an industry event that the UK’s Carbon Border Adjustment Mechanism (CBAM), scheduled to start on 1 January 2027, could raise costs for companies using covered industrial inputs while imported finished goods face no equivalent treatment. They said the imbalance could influence decisions on factory location, manufacturing stages and component sourcing.
The initial scope covers specified iron and steel, aluminium, cement, fertilisers and hydrogen products. Coverage is based on legal commodity classifications and does not generally extend to every manufactured item containing steel or aluminium.
The concern is that British companies buying covered materials in the UK could face higher input costs while competing with products made abroad that fall outside equivalent UK CBAM treatment. A British component manufacturer, for example, could bear the cost of covered inputs while a foreign competitor supplying a more complete manufactured product avoids comparable treatment. The warning describes a potential imbalance; it does not establish that manufacturers have already relocated because of the mechanism.
The UK government has not agreed to extend charges to additional products, and no change to the scope scheduled for January 2027 has been announced. Separately, the European Union is negotiating an extension of its CBAM framework to selected downstream products. The proposed extension is partly intended to address the risk that emissions-intensive production could shift into goods not currently covered.
For Serbian metal fabricators and industrial exporters, the distinction between basic inputs and downstream goods may mean different market-access conditions in the UK and the EU. The policy question for British manufacturers is whether carbon-border rules can protect domestic materials production without adding costs for customers that use those materials.