A balanced expansion of the European Union’s Carbon Border Adjustment Mechanism (CBAM) could increase the value of Serbia-EU trade subject to carbon reporting and cost allocation to between €4.3 billion and €5.3 billion, based on 2025 trade patterns. Estimates by CBAM.Clarion.Engineer indicate that selected manufactured exports worth an additional €1.8 billion to €2.7 billion could be brought within the mechanism if the EU adopts its preferred downstream product scope.
The assessment uses Serbia’s 2025 export structure as a fixed reference point, matching candidate Combined Nomenclature (CN) product groups against detailed EU import data while excluding products already covered by the current CBAM framework. The model also removes goods that do not meet proposed steel or aluminium content criteria and adjusts for overlaps between customs classifications.
Manufacturing Exports Form the Largest Potential Exposure
Detailed trade data show that EU imports of Serbian electrical and electronic equipment reached approximately $4.64 billion in 2025. The category included $2.07 billion of insulated wire and cable, $745 million of motors and generators, and more than $300 million of motor, generator and transformer components. Imports of Serbian machinery totalled approximately $1.75 billion, while vehicles and automotive components amounted to $2.12 billion, including $1.18 billion of parts and accessories. Furniture, lighting products and prefabricated buildings accounted for a further $1.01 billion. Rather than converting these figures using a single exchange rate, the values were normalised against the European Commission’s official €21.185 billion total for EU imports from Serbia in 2025.
Balanced Scenario Would Double Current CBAM Trade Coverage
Under the current CBAM product list, more than €2.54 billion of Serbia’s exports to the European Union—representing over 12% of EU imports from the country—are estimated to fall within the mechanism. A targeted extension covering approximately 70–80 CN codes would bring an additional €0.9 billion to €1.4 billion into scope, increasing total covered trade to €3.4 billion–€4.0 billion, or around 16–19% of EU imports from Serbia.
The balanced expansion, covering approximately 150–180 CN codes, would extend CBAM to another €1.8 billion–€2.7 billion of trade, raising total exposure to €4.3 billion–€5.3 billion, equivalent to approximately 20–25% of EU imports. A broad expansion covering 230–250 CN codes would add between €2.5 billion and €3.4 billion, resulting in total trade potentially covered of €5.0 billion–€5.9 billion, or approximately 24–28% of Serbia’s exports to the European Union.
These estimates represent the value of trade that could become subject to CBAM obligations rather than the resulting carbon certificate liability. The analysis also assumes the 2025 trade structure remains unchanged and does not project future changes in exports, industrial output, exchange rates or European demand through 2028. The balanced scenario is presented as the principal working estimate, placing the midpoint of potential CBAM-covered trade at approximately €4.8 billion, representing around 23% of all EU imports from Serbia in 2025.
Electrical Equipment Represents Largest Area of Uncertainty
The largest potential increase in CBAM exposure lies within electrical machinery and equipment. The model estimates that selected cables, electrical conductors, motors, generators, transformers and related components could contribute an additional €650 million to €1.05 billion of trade.
The range remains broad because Serbia’s cable exports include copper-dominant products, low-voltage wiring and automotive wiring harnesses that may not satisfy the final material-content requirements or CN-code definitions. Although the Council of the European Union proposal specifically includes certain high-voltage conductors containing steel or aluminium, it does not automatically extend to the entire $2.07 billion insulated wire and cable category.
Machinery and Automotive Components Add Significant Exposure
The assessment estimates that non-electrical machinery could contribute another €450 million–€700 million of CBAM-covered exports.
Serbia supplied substantial quantities of pumps, compressors, refrigeration equipment, heat pumps, valves, industrial thermal-treatment machinery, gears and specialised mechanical equipment to the European Union during 2025. The Council’s negotiating proposal includes selected pumps, furnace burners, industrial furnaces, refrigeration equipment, freezers and heat pumps, although eligibility depends on the precise CN8 classification and, for several “ex” product categories, proof that the goods contain qualifying steel or aluminium. The estimated additional exposure for vehicles and automotive components ranges from €400 million to €650 million.
Finished passenger cars are not broadly included within the first downstream expansion, meaning Serbia’s approximately $773 million in passenger-car exports should not be regarded as fully exposed. The greater potential impact is concentrated in the $1.18 billion automotive components segment, where gearboxes, road wheels, suspension systems, radiators, selected vehicle bodies, chassis and other metal-intensive parts appear in the Council’s proposed product list. Serbia’s exports of completed goods vehicles remained comparatively limited during 2025, indicating that the principal automotive exposure would arise from components supplied into European manufacturing supply chains rather than finished commercial vehicles.
Furniture and Other Industrial Products Also Included
The model estimates that metal furniture, metal-framed seating and prefabricated buildings could account for an additional €100 million–€200 million of CBAM-covered exports. Although Serbia exported more than $1 billion of furniture and prefabricated buildings in 2025, much of that trade consisted of wooden furniture, upholstered products, lighting equipment and other non-metal goods. The estimated exposure is therefore limited to products matching the proposed metal-intensive classifications. A further €150 million–€300 million could originate from specialised fittings, industrial equipment, technical apparatus and other products containing significant quantities of steel or aluminium outside the principal machinery, electrical, automotive and furniture sectors.
According to CBAM.Clarion.Engineer, this part of the estimate remains particularly sensitive to ongoing negotiations between the European Parliament and the Council of the European Union, as the Council has already proposed narrowing or removing several technical and medical product categories considered in earlier versions of the downstream expansion list.
Elevated by CBAM.Clarion.Engineer
