Trump Administration Strikes Again! US Demands EU Dismantle Sustainability Regulations and Other Non-Tariff Barriers

The United States intensified pressure on the European Union on Friday (14th), demanding the relaxation of corporate sustainability and carbon emissions regulations, and calling on the EU to honor previous commitments to ensure these rules do not impose undue restrictions on transatlantic trade. However, the EU stressed that its regulatory sovereignty is not up for negotiation, indicating that the focus of trade tensions has shifted from tariffs to non-tariff trade barriers.

Andrew Puzder, the U.S. Ambassador to the EU, posted on social media platform X, urging the EU to fulfill commitments made during trade negotiations with President Trump in Tumberry, Scotland, in July 2025. Under the framework agreement, the EU pledged to ensure that the Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD) would not create undue barriers to transatlantic trade.

Puzder pointed out that the extraterritorial application clauses of these regulations would harm U.S. businesses and workers, and warned that the impact would not be limited to the United States alone. The regulations require large companies operating in the EU—including U.S. firms—to disclose the environmental and social impacts of their global supply chains, including carbon emissions and labor conditions.

In response, a European Commission spokesperson stated that the U.S. and EU are still negotiating on tariff and non-tariff issues, and that the EU has already explained its regulatory framework to the U.S. side and is willing to cooperate to expand bilateral trade. However, the spokesperson emphasized that the EU’s legal framework and regulatory autonomy are “off the table” in negotiations.

In addition to corporate sustainability rules, Washington is also urging the EU to revise its Carbon Border Adjustment Mechanism (CBAM). This system imposes fees on imported goods that do not meet the EU’s carbon emission standards, which the U.S. argues could place additional burdens on American exporters.

Insiders expect that the U.S. and EU may issue a joint statement this autumn addressing the non-tariff issues under the Tumberry agreement. Over the past year, the EU has already relaxed some policies criticized by the U.S., including anti-deforestation regulations and methane emission rules. However, sources familiar with the EU’s position say Brussels currently has no intention of making further concessions.

Last year, the EU also scaled back the scope of its corporate sustainability regulations in response to pushback from companies and governments, including the U.S. and Qatar. A revised version adopted in December 2023 limited CSDDD to only the largest companies, delaying compliance deadlines by two years to mid-2029. The CSRD now applies only to companies with more than 1,000 employees—far higher than the original threshold of 250.

Despite these changes, U.S. companies including ExxonMobil (XOM-US) are calling for more significant adjustments, with some even advocating for full exemptions for foreign firms. The U.S. acknowledged partial reforms in the EU’s December 2023 sustainability regulation consolidation package but stated that concerns over the CSDDD and CSRD remain insufficiently addressed.