Why Europe’s Manufacturers Say the CBAM Gap Is Putting Supply Chains at Risk

European manufacturers face pressure not only when imported raw steel competes with European steel, but when imported components and finished products replace production at several links in the chain. Eurometal’s argument is that this can reduce orders for European processors, distributors, parts makers and steel producers at once—weakening industrial capacity as well as employment. 59

That concern is the focus of the group’s European Convoy for Industrial Competitiveness in Brussels. Its message is straightforward: climate policy and open trade should not inadvertently make it easier to manufacture steel-intensive products outside Europe and sell them back into the EU. 1214

The supply-chain risk: displacement can move downstream first

Eurometal represents steel distribution, processing and downstream manufacturing interests. It says rising imports of steel-intensive manufactured goods create a risk that production migrates from European factories to overseas suppliers, leaving less demand for the European firms that process metals, make components and supply finished-goods producers. 513

This is why the group frames the issue as a supply-chain problem rather than simply a steel-import problem. When a European-made component loses an order to an imported finished product, the lost activity may extend upstream to material handling, processing and steel supply.

The association has forecast 300,000 manufacturing job losses by the end of 2026 amid expanding Chinese competition. That figure is a warning from an industry body, not an official EU employment projection, and should be read as such. 11

Why CBAM is at the centre of the argument

The EU’s Carbon Border Adjustment Mechanism is designed to address carbon leakage by requiring importers of covered goods to buy certificates priced in line with the EU carbon market. The mechanism began its definitive phase in 2026. 33

Eurometal does not present its case as opposition to carbon pricing. Instead, it argues that some downstream, steel-containing finished goods entering the EU do not face equivalent CBAM or trade-defence obligations to comparable goods produced inside the bloc. In its view, that difference can leave European manufacturers carrying decarbonisation and compliance costs while competing against imports with a different cost base. 935

There is a genuine policy trade-off behind the campaign. The European Commission says CBAM can encourage industrial decarbonisation and improve competitiveness for cleaner operators. 34 But OECD analysis also finds that carbon-border measures can raise input costs for downstream sectors not covered by the mechanism, potentially reducing their competitiveness. 40

The practical question is therefore one of scope: how can the EU protect against carbon leakage without simply moving it from basic materials into more processed, imported goods?

Automotive illustrates the scale of the stakes

The automotive value chain is central to the debate because it relies on a wide network of metal-intensive suppliers and competes in highly price-sensitive markets. The European Commission says the sector accounts for €1 trillion in EU GDP, one-third of private R&D investment, and 13 million direct and indirect jobs. 17

Volkswagen’s restructuring has added urgency to wider anxieties about industrial employment. Reporting in 2026 indicated the company was considering cuts of up to 100,000 jobs, alongside possible factory closures; these plans reflect a mix of competitive, demand and technological pressures, not Chinese competition alone. 1819

That distinction matters. A single company’s restructuring cannot prove the impact of CBAM coverage or imports. But it shows why suppliers and policymakers are concerned about shocks that travel through a tightly connected manufacturing ecosystem.

What Eurometal wanted the Brussels convoy to highlight

The September 7 action brought industry delegations and a truck convoy to the European Quarter under the slogan “Keep Manufacturing in Europe.” 1214 Participants planned a procession of ten symbolic coffins around the European Commission’s Berlaymont headquarters, representing manufacturing capacity, industrial know-how and jobs they believe are at risk if present trends continue. 1114

Eurometal’s stated asks include:

• fair and equivalent competitive conditions across the manufacturing value chain;
• CBAM and trade rules that address steel derivatives and downstream finished goods;
• stronger protection against circumvention; and
• better traceability, including the origin of metals used in imported products. 912

The bigger test for EU industrial policy

The protest’s underlying claim is that Europe cannot assess industrial competitiveness only at the point where raw steel enters the border. The analysis must follow the product through processing, components and final assembly.

Whether policymakers agree with Eurometal’s proposed remedies is a separate question. The evidence in the provided sources supports a real debate over downstream competitiveness, while the most dramatic job-loss forecasts remain industry claims rather than settled projections. What is clear is that CBAM’s design will be judged not only by its emissions impact, but also by whether Europe can retain investment and production across the supply chains needed for its green transition. 3440