CBAM's financial phase started January 1. US steel and fertilizer exporters are about to find out what that costs.

The CBAM transitional phase ended December 31, 2025. As of January 1, 2026, EU importers of cement, iron and steel, aluminum, fertilizers, electricity, and hydrogen are inside the definitive regime. Certificates covering 2026 imports must be purchased and surrendered by September 30, 2027. The mechanic is straightforward: if the embedded emissions in your product are higher than what an EU producer would pay for under the ETS, the importer pays the delta. The part US exporters are now waking up to is the default emissions values, the cost they imply, and how thin the window is to do anything about it before the first surrender deadline.

Default values are punitive on purpose

If a US mill cannot or will not provide third-party verified emissions data, the EU applies country and product-specific default values plus a markup. O'Melveny's analysis of the new default tables flagged that US iron and steel face higher implied carbon liabilities than several Asian competitors using the default route, despite the US grid having a lower average carbon intensity than China's. The reason is data quality: the EU is not going to give the US the benefit of the doubt where verified product-level data does not exist. The Bipartisan Policy Center has been pushing for a US measurement framework precisely because the absence of one is now a tax. Until that exists, US producers either fund their own ISO 14067 product carbon footprint verification - typically $40K-$120K per facility per product line - or they accept the default and watch their EU customer pass the certificate cost back through the price.

The certificate price tracks the weekly average ETS price. Going into 2026 that is sitting in the EUR 70-85 per ton CO2e range. Translate that to a hot-rolled coil with embedded emissions of roughly 1.9-2.1 tons CO2e per ton of steel, and the certificate liability lands in the EUR 130-180 per ton range on top of the FOB. On a 25,000-ton vessel parcel that is EUR 3.25-4.5 million. That math changes which mills are competitive and which ones are not.

Who is most exposed

US Commerce ITA estimates that US exports of CBAM-covered goods to the EU run roughly $4.5 billion a year. Iron and steel make up the majority. Aluminum is meaningful. Fertilizer producers in Louisiana and the Gulf are exposed because nitrogen-based ammonia and urea are explicitly named, and US ammonia is largely natural gas-derived, which sits middle-of-the-pack on emissions intensity. Cement is small in absolute volume but high-intensity per ton. Hydrogen is small today and will not be small in 2027.

Within steel, integrated blast-furnace producers are most exposed and EAF mini-mills running heavy scrap charges are the least. Nucor, Steel Dynamics, and Commercial Metals come into 2026 with structurally favorable embedded emissions vs an integrated US Steel or Cleveland-Cliffs hot end. Anyone in the EU sourcing US plate, hot-band, or rebar is going to start asking for verified product carbon footprints in their next quarterly RFQ - the ones that already have are flagging a 15-25% reweighting of supplier scorecards toward verified emissions.

What's coming in 2027

The Commission has already proposed an expansion of CBAM scope to downstream products built from the covered inputs - things like steel screws, aluminum extrusions, finished steel products. Akin Gump's read is that the downstream expansion targets the obvious tariff-engineering loophole where a Chinese billet gets rolled in Turkey and shipped as a finished product. Implementation is targeted for 2027. Anyone shipping fasteners, structural shapes, or aluminum profiles into the EU should treat that calendar as binding. Polymers and chemicals are on the watch list for 2028, which means the trajectory is clear: every carbon-intensive input that lands in the EU eventually gets the certificate treatment.

The forwarder play

Two real openings here. First, importer-of-record CBAM declaration support: most EU importers of US steel are not staffed for quarterly emissions reporting and they are looking at the supplier - which is the US mill - to hand them verified data. Forwarders that can broker that data exchange and validate the chain are charging for it. Second, sourcing arbitrage advisory: Brazilian green steel and certain Indian aluminum producers with verified low-emission product can land cheaper into Hamburg than US output once the certificate cost is loaded. Reps working US steel exporters into the EU should be modeling the loaded landed cost, not just the FOB. The conversation that opens doors is: "Your EU customer's incoming shipment from your competitor lands EUR 110 per ton lower after CBAM. Here is what you can do about it before September 2027."

Inside LIT, this shows up as trade lane intelligence on HS chapters 72, 73, 76, 25, and 31 into EU ports. Reps watching US-to-EU steel and fertilizer flows get pinged when shipper volume shifts, which is the leading indicator that a CBAM compliance conversation is happening internally. That is the call to make first.