The EU’s Carbon Border Adjustment Mechanism (CBAM) is approaching the end of its transitional phase, and while CBAM carbon pricing will not apply until 2026, the remainder of 2025 is shaping up to be a turning point. U.S. exporters should use this time to evaluate their current reporting responsibilities and prepare for full enforcement beginning next year.
Where We Stand: CBAM 2025 Update
From October 1, 2023, through December 31, 2025, CBAM remains in its transitional phase. EU importers of goods such as steel, aluminum, cement, fertilizers, hydrogen, and electricity must submit quarterly emissions reports via the EU’s Transitional Registry. No CBAM certificates or payments are due yet, but preparatory pressures are mounting across the supply chain.
Key Changes on the Way
On June 18, 2025, the European Parliament and Council reached a political agreement on Omnibus Package I, which builds on the Commission’s proposal released on February 26, 2025.
Key provisions include:
- A 50 tonne annual threshold per importer for steel, aluminum, cement, and fertilizers, replacing the €150 value exemption. This exempts approximately 90 percent of importers, while maintaining coverage of 99 percent of emissions.
- Removal of the flat-value threshold, making CBAM exemptions solely weight-based.
- Simplified procedures for authorization, emissions calculation, and data submission.
- Strengthened anti-abuse provisions, audit rules, and rules around customs agent liability and carbon-cost claims.
While full adoption is expected by September 2025, this remains subject to final legal approval and publication in the Official Journal.
Furthermore, in July 2025, the European Commission advanced two additional major CBAM-related initiatives that are now in progress. While no final legislation has been adopted yet, these efforts could influence how the mechanism evolves in 2026 and beyond.
- Exporter Compensation: On July 2, 2025, the Commission announced plans to propose a compensation scheme funded by CBAM revenues to offset carbon costs for EU exporters in sectors such as steel, cement, and aluminum. Estimated compensation is approximately €70 million in 2026, rising toward €1.5 billion by 2028. The formal proposal is expected by the end of 2025.
- Scope Expansion Consultation: On July 1, 2025, the Commission launched a public consultation seeking stakeholder feedback on expanding CBAM to downstream products, tightening anti-circumvention measures, and reconsidering how emissions, especially from electricity, are treated. The consultation runs through August 26, 2025, with a legislative proposal expected later this year.
Why This Matters for U.S. Exporters
The CBAM regulatory landscape is shifting quickly. Even if your EU customers currently fall below the de minimis threshold, the risk of exposure remains real, and it’s growing. Three key developments are especially relevant for U.S. companies:
- Threshold changes may not shield you. Threshold calculations apply at the importer level, meaning your shipments could still contribute to a partner’s reporting obligations. Even below the threshold, your EU customers may request emissions data to stay audit-ready.
- Expanded product scope is on the table. If your company exports components, finished goods, or packaging that includes CBAM-covered materials, you may be affected by the upcoming scope review. The outcome of the public consultation could significantly expand CBAM’s reach by 2026.
- EU exporter compensation may shift trade dynamics. The proposed rebate system for EU manufacturers could affect pricing and competitiveness across sectors like steel and aluminum. U.S. exporters should stay alert to changes in buyer expectations, contract structures, or sourcing strategies.
What to Do Now
To prepare for full CBAM enforcement in 2026 and stay ahead of proposed changes, U.S. exporters should take the following steps:
- Assess export volumes by importer. Confirm how much of each CBAM-covered product your EU customers import annually. Even if your individual shipments are small, combined volumes may exceed the 50-tonne threshold and trigger reporting obligations.
- Build emissions data readiness. Develop cradle to gate Product Carbon Footprints (PCFs) or Environmental Product Declarations (EPDs) that meet EU expectations. Even below threshold, buyers may request this data to support their own compliance and audit requirements.
- Engage proactively with EU customers. Ask how they plan to manage CBAM certificate surrender in 2026, and what level of emissions documentation they expect from suppliers. This is especially important if your goods are incorporated into downstream products or cross thresholds through aggregation.
- Monitor scope expansion proposals. The public consultation closing August 26, 2025 could lead to expanded product coverage. Companies exporting processed goods, packaged products, or assemblies that include steel, aluminum, cement, or fertilizers should evaluate their exposure.
- Track potential trade impacts. As the EU develops compensation schemes for domestic exporters, U.S. suppliers may face new pricing dynamics or buyer preference shifts. Stay engaged with key accounts to anticipate changes in sourcing behavior or contractual terms.
Conclusion: CBAM Enforcement Is Coming, Be Ready
CBAM’s transitional window is closing quickly. The EU has finalized simplification rules, launched consultations on future scope, and is preparing compensation options for EU exporters. As emissions reporting continues in 2025 and certificate pricing begins in January 2026, now is the time for U.S. exporters to transition from short-term compliance to long-term readiness. Taking action today will support uninterrupted access to the EU market tomorrow.
For more guidance on how to prepare your business for CBAM’s next phase, contact our compliance team at [email protected] or visit sustainable-markets.com/cbam for expert CBAM guidance.
