The next major dispute over the Carbon Border Adjustment Mechanism (CBAM) centres on downstream products made from steel and aluminium. The European Commission has proposed adding 180 further steel- and aluminium-intensive products from 2028, while the Council backs a wider list of about 200 goods. The European Parliament has adopted a negotiating position covering a substantially larger set of products. The final scope will be shaped by negotiations among the EU institutions.
For companies importing or manufacturing covered goods, the immediate task is to separate proposed changes from the rules that apply to imports in 2026. The Commission proposal and the Council and Parliament positions are used for scenario planning and contract preparation, but they should not be treated as binding requirements until amending legislation takes effect. A two-scenario approach is presented as a way to support preparation without making compliance decisions that depend on legislation still under negotiation.
Scenario planning for CBAM changes ahead of amending legislation
The two-scenario approach involves one model built on current law and another reflecting potential reform. This structure is intended to help businesses develop data systems and consider optional contract clauses. It is also meant to avoid decisions that would rely on outcomes that have not yet been finalised through the legislative process.
Alongside these planning steps, attention is directed to how the definitive CBAM regime continues to apply to goods already covered by the existing regulation. The proposed downstream extension is aimed at addressing carbon leakage further along industrial value chains. It also seeks to reduce the risk that imported finished products benefit competitively because their steel or aluminium inputs were processed outside the EU.
Institutional differences could shift which CN codes are covered
Commercial impacts are linked to differences between the lists supported by EU institutions. A fastener, cable, machinery component, or fabricated metal product could be included under one proposed list but excluded under another. As a result, broad assumptions that all downstream steel or aluminium products will be covered are described as insufficient for business planning.
The exposure assessment depends on the final product list and the Combined Nomenclature (CN) codes it covers. Manufacturers are advised to map their CN codes, bills of materials, covered metal precursors, supplier installations, and available emissions data. This mapping is intended to support multiple legislative scenarios and enable responses to EU customer requests before new legal obligations start.
For companies with diversified portfolios, a product-level scope assessment is highlighted as particularly important. Exposure should be evaluated against each product’s precise customs classification rather than inferred from its broader industrial category. This approach is presented as a way to avoid misalignment between internal assumptions and customs treatment.
Sourcing, emissions data and contract negotiations
The final product list may affect sourcing strategies, manufacturing locations, and investment decisions. EU downstream producers seek protection against imports containing carbon-intensive metals. Non-EU manufacturers using verified lower-emission inputs may retain a competitive advantage if the final methodology allows those emissions differences to be reflected in the CBAM calculation.
If the downstream extension enters into force from 2028, reliance on default emissions values could increase costs for manufacturers. Companies able to obtain reliable information about metal inputs and production installations are described as better positioned to assess exposure under different scenarios.
For exporters outside the EU, proposed changes may influence commercial discussions before they become direct legal obligations. EU buyers planning multi-year contracts or 2028 sourcing arrangements may request emissions information in advance. Suppliers are expected to provide available evidence, indicate which regulatory scenario it supports, and distinguish verified information from assumptions while avoiding commitments about specific CBAM treatment before scope and methodology are settled.
Potential implications for Western Balkans exporters
The Western Balkans include automotive, machinery, electrical, and metal-processing supply chains serving EU markets. Extending CBAM coverage to downstream goods could therefore affect a broader group of regional exporters than the mechanism’s original focus on primary materials.
Proximity to EU customers may support logistics for suppliers in the region, while reliable carbon information can also become part of supplier assessment. Preparing emissions data for steel and aluminium inputs alongside consistent product and customs records is described as a way for exporters to respond to customer requests as negotiations progress.
Companies are advised to prioritise products with high revenue exposure that appear across all or most institutional positions. Early data preparation is linked to these products, while investment decisions dependent on the exact final scope may be deferred until legislation is finalised.
Turning negotiations into compliance documentation
Monitoring negotiations is described as needing operational output rather than only tracking announcements. Each material change should have an owner, a decision date, and an assessment of implications for procurement, customs processes, engineering work, finance functions, and customer communications.
A three-column scope matrix covering Commission, Council, and Parliament positions can help exporters track differences in proposed coverage. As negotiations advance, companies would update the matrix and identify which CN codes, supplier records, contracts, and investment cases require reassessment.
The compliance file is expected to connect purchasing, production, customs, and finance records so that assumptions can be explained consistently to both a verifier and a commercial manager. This includes documenting conditions under which an emissions calculation or regulatory assessment might change.
A minimum decision file is also described as necessary. It should record the legal status of relevant provisions, customs treatment details, responsible data ownership, implementation deadlines, and approval of key assumptions. It should also include an alternative approach if preferred treatment cannot be substantiated.
The scope question for finished and semi-finished industrial products
The central issue is how far CBAM extends beyond basic steel and aluminium into finished and semi-finished industrial products. The outcome will determine which manufacturers remain mainly subject to customer data requests versus those facing direct obligations under an expanded legal framework.
Until final legislation is adopted, companies are advised to keep current compliance requirements separate from future scenarios while preparing product classifications and emissions evidence usable under either outcome. The final CN-code scope remains described as critical for identifying which supply chains must convert that preparation into formal CBAM compliance.