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 Council’s positions and amendments approved by the European Parliament envisage adding hundreds of downstream products. If agreed, the changes could bring fabricated metals, industrial components and other manufactured goods within the CBAM system from 1 January 2028.
The legislative proposal is identified as 2025/0419(COD) and was introduced by the European Commission. It aims to address the risk of carbon leakage shifting from basic materials to finished products. The proposal also includes anti-circumvention measures targeting 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 differences before a final regulation can enter into force.
Council and Parliament positions differ on number of covered products
The scale of the proposed downstream expansion differs between negotiating positions. An October consultation notice from US trade authorities summarising the EU process said the Council’s position would add more than 300 products. It also reported that the Parliament’s position would extend coverage to approximately 400 products beyond the existing CBAM product universe.
These figures point to a broader scope than an earlier approach associated with the Commission, which 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. Neither the Council’s position nor the Parliament’s amendments is treated as adopted legislation.
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. The scope will be determined through the ongoing legislative process.
Southeast Europe supply chains may need CBAM exposure checks
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 the finished product become subject to CBAM from 2028. This 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 final scope of the regulation. The precise impact on individual manufacturers cannot be established until institutions agree on product coverage.
Downstream inclusion would expand emissions-data and contract requirements
Including additional manufactured goods would affect what downstream producers need to obtain from suppliers. Manufacturers could need verified precursor emissions data from steel and aluminium suppliers, documented allocation of emissions between production lines, and contractual rights enabling access to information required by EU customers. These elements are linked to how compliance information would be gathered across supply chains.
Procurement arrangements would become more connected to CBAM compliance, with manufacturers needing to check whether supplier agreements provide sufficient access to emissions information for goods sold into the EU market. Companies may also need to review enterprise resource planning records and emissions-allocation systems to accommodate additional product categories and associated data requirements. Adjustments would depend on what is ultimately included in the final regulation.
CN product list remains central for 2028 implementation planning
The negotiations leave manufacturers with uncertainty over how far downstream coverage will extend. Companies cannot assume that product lists supported by either institution will become part of final legal text. Postponing exposure assessments until adoption could limit time to revise supplier contracts, information systems and emissions-accounting procedures.
The proposed extension date is 1 January 2028, representing a further stage in CBAM development beyond basic materials toward a wider range of industrial goods. The trilogue outcome will determine how many downstream products are included and which parts of European and international manufacturing supply chains must prepare for additional carbon-accounting obligations.