Negotiations on expanding the EU Carbon Border Adjustment Mechanism (CBAM) to additional manufactured products could change carbon-cost exposure for industrial supply chains starting in 2028. The scope would depend on the precise customs classification of each import, which determines whether shipments fall within the rules. Machinery components, metal products and household goods are among the categories discussed, with 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 and would reinforce measures aimed at preventing circumvention.
Institutional lists differ on product coverage
The Commission’s initial proposal covered about 180 products. A Council negotiating mandate dated June 12 broadened the proposed scope, while the European Parliament’s position from Sept. 15 supported a substantially longer list described in parliamentary material as covering 457 products. The figures reflect institutional negotiating positions rather than a final legally binding product list.
The discussion also highlights a potential imbalance under the current mechanism. EU processors buying steel and aluminium may incur carbon-related costs through their inputs, while foreign manufacturers exporting certain finished products made from similar materials may remain outside CBAM. Extending coverage is intended to reduce incentives to relocate processing outside the EU, while machinery, automotive and equipment producers have raised concerns about additional input costs and administrative requirements for bringing more components into the system.
Combined Nomenclature determines whether imports are covered
The number of products cited by EU institutions does not by itself establish how far CBAM could reach. Coverage must be checked against the Combined Nomenclature (CN) at the level of each individual customs entry rather than inferred from broad industry descriptions such as automotive, machinery or aluminium products.
A single six-digit Harmonized System heading can include several eight-digit CN subheadings that may receive different regulatory treatment. An entry covering an entire HS heading is therefore not equivalent to one specifying only a particular CN8 code. A product also does not automatically become subject to CBAM solely because its manufacture involves a metal-intensive industry or uses limited amounts of steel or aluminium.
Institutional texts also differ in how they count products and legislative entries. One line may encompass an entire customs heading, while another identifies individual CN8 subcodes, so announcements referencing 180, 200 or 457 items cannot independently establish how many imports would ultimately be covered. Customs specialists are expected to reconcile each proposed provision with the applicable year’s Combined Nomenclature, including residual “other” categories and relevant exclusions.
Scrap treatment, anti-circumvention and thresholds remain unresolved
The proposals address scrap 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 which lower-emission output is 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 the finished good.
An additional unresolved element is the annual 50-tonne mass-based threshold for relevant CBAM imports. The European Parliament has supported reducing the threshold for aluminium to 5 tonnes, but that position remains part of legislative negotiations rather than an operative change companies can already apply.
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 an incorrect assessment of obligations.
Electricity emissions methodology affects exporters in regional markets
The Commission’s December proposal includes changes to how emissions associated with electricity are calculated. The issue is relevant for exporters in Serbia, Montenegro, Türkiye and other interconnected electricity markets where electricity-related emissions treatment can influence assessments for industrial products.
Proposed changes to default electricity factors and conditions for using actual emissions must be distinguished from stricter requirements currently set out in Annex IV. Those requirements cover matters including contracts, network congestion, generation intensity, hourly nominations and independent verification.
The source rules indicate that any relaxation or adjustment would not retroactively make a previously non-compliant electricity supply chain compliant. Exporters and importers are expected to assess existing arrangements under rules currently applicable while monitoring how legislative negotiations could change the methodology.
Trade analysis requires CN8-level data and origin exemptions
Even if expanded coverage starts in 2028, trade analysis based only on EU imports under HS chapters 72, 73 and 76 would not capture full commercial impact. A robust assessment would require the proposed CN8 code for each product, import values and net mass by country of origin, comparisons with the previous month and year, and estimates of embedded emissions.
Existing origin exemptions also matter under current CBAM legislation. Norway, Iceland, Liechtenstein and Switzerland have relevant exemptions, so trade from those countries needs separation when calculating potential liability.
Other market drivers can shift import patterns independently of CBAM
The movement of goods is affected by factors unrelated to carbon-border charges. European demand, trade safeguards, Chinese industrial pricing, transport costs, inventory levels, sanctions and exchange-rate movements can all influence trade flows.
A Serbian metal-component supplier experiencing changes in EU orders may be responding to automotive demand rather than carbon-cost changes. A low customs unit value recorded by a German importer may reflect differences in product mix rather than cheaper or more emissions-intensive steel.
Compliance depends on product-level evidence across supply chains
The commercial effects of expanded coverage could differ between companies operating in the same country or industrial sector. A lower-emission metal processor in the Balkans could benefit if rules increase the relative cost of higher-emission finished goods shipped from more distant markets. The same supplier could lose sales if its own products become covered but its emissions-verification records are inadequate.
An EU equipment manufacturer could see greater protection in one product line while facing higher procurement costs for components in another. Assessments based on national rankings or broad industrial classifications risk overlooking these differences because the relevant unit is the individual production and import chain. That chain includes the product’s customs code, origin, materials and emissions records.
Navigating future obligations before final lists are agreed
The EU institutions have begun negotiations, but the eventual compliance boundary remains unsettled. Exporters can prepare by classifying current products, mapping them against competing proposed CN lists and retaining factory-level materials and emissions documentation that can be audited.
The timing of commercial agreements is also relevant because contracts signed before agreement on the final product list may need provisions on how any future CBAM liability will be allocated between suppliers and buyers. The eventual scope could determine not only which goods face additional obligations but also which party bears associated carbon costs under existing supply arrangements.