Serbia’s exposure to the European Union’s Carbon Border Adjustment Mechanism (CBAM) is set to extend beyond electricity exports, primary metals, fertilisers and cement. The next phase is intended to cover selected machinery, electrical equipment, vehicle components, metal furniture, prefabricated buildings and other products whose value is substantially linked to steel or aluminium. The EU’s approach targets goods further down the industrial value chain rather than only upstream materials.
Serbia’s trade relationship with the EU is dominated by manufactured goods, including electrical equipment, machinery, vehicle components and other metal-intensive industrial products. These sectors are described as deeply integrated into European corporate supply chains and as accounting for a larger share of Serbian exports than the six sectors covered by the initial CBAM framework. As a result, the downstream shift is presented as a broader compliance challenge for Serbian exporters.
The first formal downstream extension has not yet been adopted as final law. The Council of the EU agreed its negotiating position on 12 June 2026, while the European Parliament’s responsible committee approved its report on 6 July 2026 and tabled it for plenary consideration on 9 July 2026. An indicative first-reading vote is scheduled for 14 September 2026, with application under the Council position starting on 1 January 2028, subject to negotiation over the final CN-code list.
Current CBAM scope: 2024 trade value and sector breakdown
A sector-level assessment indicates that products within the existing CBAM scope represented 11.7% of Serbia’s exports to the EU in 2024. Total EU imports from Serbia across all goods were reported at €18.879 billion, implying a current-scope CBAM trade value of approximately €2.209 billion. Electricity was the largest category within that envelope.
Electricity accounted for 4.7% of Serbia’s EU-bound exports, equivalent to about €887 million when applied to the EU import value. Iron and steel represented another 4.5%, or roughly €850 million, while aluminium contributed 2%, equivalent to approximately €378 million. Fertilisers were around €94 million, cement about €19 million, and hydrogen was negligible.
Electricity and iron and steel together represented close to 79% of the estimated current CBAM trade envelope. The concentration has been linked to earlier focus on electricity generation and steelmaking, alongside carbon intensity in large industrial installations. The same figures are also described as not reflecting wider manufacturing exposure expected once steel and aluminium inputs move into finished and semi-finished products.
2025 exposure estimates and projected annual costs
EU imports from Serbia increased by 12.2% in 2025, reaching €21.185 billion. Serbia’s Ministry of Finance estimated that more than 12% of exports to the EU were already within the current CBAM scope. The ministry identified more than 3,500 companies connected directly or indirectly with covered sectors, with approximately 1,000 companies exporting covered or potentially covered goods during 2025.
If the ministry’s minimum share is applied to the reported import value, a conservative mirror estimate for current-scope trade in 2025 is placed at more than €2.54 billion. The estimate is described as not an official CN8 customs total because it combines Serbia’s export-share assessment with EU import valuation. It is presented as a floor for estimating trade scale before downstream expansion begins.
The Ministry of Finance estimates that current CBAM could impose an annual cost of about €140 million in 2026, rising to around €161 million by 2029, assuming no Serbian carbon-pricing mechanism is credited against EU liability. Under a scenario where the EU fully recognises a carbon price paid in Serbia, the burden falls to between €127 million and €148 million. The model assumes a CBAM certificate price of €75.36 per tonne of CO₂ equivalent, with unchanged 2025 trade volumes.
The financial estimates cover only the existing product scope. They do not fully account for reporting costs, contractual exposure or potential embedded-carbon charges related to extending coverage into manufactured products from 2028. The downstream expansion therefore increases compliance considerations beyond certificate costs alone.
Council text product scope for downstream steel- and aluminium-linked goods
The downstream extension is designed around selected coverage rather than universal inclusion of all machines, appliances, vehicles or furniture. The focus is placed on goods with significant steel or aluminium content and on products where embedded emissions can be traced without requiring an excessively complex carbon-accounting system. Coverage depends on both material content tests and product classification rules.
The Council negotiating text includes selected electric motors and generators, generator components, transformer categories, steel and aluminium electrical conductors, pumps, furnace burners, industrial furnaces, freezers, refrigeration equipment and heat pumps. It also covers selected vehicles such as chassis and bodies, along with automotive components including gearboxes, wheels, suspension systems and radiators. Metal-framed seats, office furniture, other metal furniture and prefabricated buildings containing steel or aluminium are included in the proposed downstream structure.
The Commission’s impact assessment examined three expansion levels measured by CN codes: approximately 70–80 codes for a targeted option, 150–180 codes for a balanced option and 230–250 codes for a broad option. The balanced approach was identified as preferred because it would cover almost as many EU production emissions as the broad alternative while involving fewer products and importers. The Commission calculated that under the balanced option, about 85–90% of selected goods would contain at least 70% CBAM materials by weight.
The Council has refined parts of the proposed list and further changes are possible through Parliament–Council negotiations. As a result, scenarios are treated as estimates tied to different regulatory designs rather than forecasts of final legal text. The timing under discussion remains linked to an application date of 1 January 2028 under the Council position.
Total potential trade in expanded CBAM: €4.3bn–€5.3bn range
An estimate using Serbia’s 2025 trade structure maps candidate CN product families against detailed EU imports from Serbia. Categories already within the existing CBAM scope are removed, products failing steel or aluminium content tests are discounted, and overlaps between components and broader customs chapters are adjusted for. The approach uses a static base rather than forecasting changes in exports or demand by 2028.
The estimate places detailed electrical equipment imports at approximately $4.64 billion in 2025, including $2.07 billion of insulated wire and cable, $745 million of motors and generators, and more than $300 million of motor-, generator- and transformer-related components. Serbian machinery imports are estimated at about $1.75 billion, while vehicles and vehicle components total about $2.12 billion, including $1.18 billion in parts and accessories. Furniture-related categories including lighting products and prefabricated buildings are estimated at another $1.01 billion.
The analysis normalises these dollar values against an official EU total import figure of €21.185 billion. It then compares potential regulatory scope values across three expansion levels measured by additional downstream trade brought into scope alongside existing CBAM coverage. Under this framework, expanded coverage could raise total potentially in-scope trade from more than €2.54 billion under the existing list to higher ranges depending on code breadth.
The table-based results indicate that a targeted extension adding approximately 70–80 CN codes would bring total potentially in-scope trade to about €3.4–€4.0 billion (16–19% share). A balanced extension adding roughly 150–180 codes would raise totals to approximately €4.3–€5.3 billion (20–25% share). A broad extension adding about 230–250 codes would increase totals further to roughly €5.0–€5.9 billion (24–28%). Existing CBAM coverage is reflected as more than €2.54 billion with a share above 12%.
Main additional exposures by product group under balanced scenario assumptions
The balanced scenario is described as providing the most relevant working estimate based on these calculations using Serbia’s 2025 export structure as a base year reference point. It suggests additional Serbian manufactured exports brought into CBAM could total approximately €1.8–€2.7 billion, taking combined potentially in-scope trade to around €4.3–€5.3 billion by value terms used in the estimate framework.
The midpoint under this balanced scenario is placed at around €4.8 billion, equivalent to approximately 23% of all EU imports from Serbia in 2025 according to the same calculation method described earlier in the analysis framework used here.
The largest uncertainty is attributed to electrical machinery and equipment categories within downstream coverage assumptions. The model attributes roughly €650 million–€1.05 billion of additional trade exposure to selected cables, conductors, motors, generators, transformers and related components under candidate CN families considered for inclusion.
The range is described as wide because Serbian cable exports include copper-dominant products such as low-voltage wiring and automotive harnesses that may not meet final material-content tests or CN-code requirements used for eligibility determination under negotiations described earlier here.
The same analysis indicates that non-electrical machinery could add another €450 million–€700 million based on exports including pumps, compressors, refrigeration equipment, heat pumps, valves, industrial thermal-treatment machinery, gears and specialised mechanical equipment supplied to the EU during 2025.
Council text coverage cited for this group includes selected pumps, furnace burners, industrial furnaces, refrigeration equipment, freezers and heat pumps; however coverage depends on exact CN8 classification details and evidence requirements tied to “ex” classifications where qualifying steel or aluminium content must be demonstrated.
Automotive parts risk; furniture; technical apparatus outside principal groups
The estimate assigns vehicles-related exposure potential at approximately €400 million–€650 million under downstream assumptions focused on selected categories rather than broad inclusion of finished passenger cars in early waves described here.
The analysis notes that finished passenger cars are not broadly included in the first downstream expansion being considered from 2028 onward under this framework; it therefore cautions against treating passenger-car export values as fully exposed within this initial downstream design based on these calculations alone.
The more significant risk is placed in vehicle component categories valued at about $1.18 billion within Serbia’s export structure used here for modelling purposes; gearboxes, road wheels, suspension systems radiators selected bodies chassis plus other metal-intensive parts are listed among items included in Council negotiations cited earlier here.
The same modelling indicates that completed goods vehicle exports were comparatively small during 2025; accordingly it expects automotive impact driven primarily by components supplied into European production systems rather than finished trucks when applying these assumptions used for valuation exposure estimates here.
Differentiating embedded-emissions liability from customs-value effects; evidence requirements
A product valued at €10,000 will not face a CBAM charge calculated as a percentage of its entire customs value under the proposed downstream methodology described here for goods selected beyond initial raw materials coverage.
Independent Serbian manufacturers face a transition where competitiveness depends increasingly on whether they can obtain verifiable data from steel and aluminium suppliers separate covered from non-covered materials allocate inputs across exported products and provide information formats required by EU customers referenced within this factual set.
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