Trade tensions between the United States and European Union have intensified as Washington presses Brussels to further ease corporate sustainability rules that govern the environmental and social impact of large companies and their global supply chains.
US Ambassador to the EU Andrew Puzder has urged the bloc to honor commitments made under the 2025 US-EU trade framework, arguing that the European Union’s Corporate Sustainability Due Diligence Directive (CSDDD) and Corporate Sustainability Reporting Directive (CSRD) could create barriers to transatlantic trade.
The EU rules require large companies operating in the bloc, including US firms, to report environmental and social impacts and address conditions across their supply chains.
Puzder argued that the extraterritorial requirements could place additional burdens on American businesses and workers. Washington is also pressing the EU to make changes to its Carbon Border Adjustment Mechanism (CBAM), which applies charges to certain imports based on their carbon emissions.
The latest dispute comes as Washington and Brussels shift their attention from tariff commitments to non-tariff trade barriers following the implementation of tariff arrangements agreed in July 2025.
The two sides are expected to continue discussions, with joint statements on non-tariff issues potentially coming later this year.
The European Commission said the EU and US remain engaged in discussions over tariff and non-tariff trade issues and expressed a willingness to expand trade cooperation.
However, Brussels has made clear that its regulatory framework and autonomy are not open to negotiation.
The EU has already scaled back parts of its sustainability regulations following pressure from businesses and governments. Changes to the CSDDD limited its application to the largest companies and delayed compliance requirements until mid-2029.
The CSRD was also narrowed, with reporting requirements now applying to companies with more than 1,000 employees, compared with the previous threshold of more than 250 employees.
Despite these changes, Washington maintains that the reforms do not fully address its concerns.
The dispute highlights a growing challenge in US-EU trade relations, as both sides attempt to balance commercial interests with environmental regulations, corporate accountability and regulatory independence.
