The United States is increasing pressure on the European Union over corporate sustainability, supply chain due diligence, and carbon-border rules as the two sides move from headline tariff negotiations into the more complicated implementation of their 2025 trade framework.
US Ambassador to the EU Andrew Puzder has called on Brussels to go further in addressing Washington’s concerns about the Corporate Sustainability Due Diligence Directive and Corporate Sustainability Reporting Directive, arguing that the remaining rules continue to impose excessive obligations on American businesses.
The European Commission has taken a different position. It says officials remain willing to work with the US on tariff and non-tariff issues but has stated that the EU’s regulatory framework and regulatory autonomy are not themselves up for negotiation.
The disagreement centres partly on language agreed in the August 2025 framework. The EU committed to efforts intended to ensure that CSDDD and CSRD do not create undue restrictions on transatlantic trade, including measures to reduce administrative burdens and address US concerns about requirements imposed on companies from non-EU countries.
Washington argues that the changes made since then do not go far enough. Brussels has already narrowed the scope of its corporate sustainability rules, limiting CSDDD to the largest companies and delaying its compliance deadline, while CSRD now applies to a smaller group of businesses than originally envisaged.
Those adjustments followed pressure from European companies and governments as well as international trading partners. The remaining dispute is over how much further the EU must go before the commitments made in the trade framework can be considered fulfilled.
For industrial businesses, the disagreement reaches well beyond corporate reporting departments. Large companies subject to due diligence and sustainability requirements need information about suppliers, production processes, labour conditions, environmental impacts, and emissions, so data requests can move down supply chains to businesses that are not themselves directly covered by every provision.
That creates a compliance cost that is difficult to separate neatly from manufacturing. Procurement teams may have to collect information from suppliers, IT systems need fields capable of storing it, audit processes must test it, and purchasing decisions can change when a supplier cannot provide the evidence required by a customer.
The Carbon Border Adjustment Mechanism adds another industrial layer. CBAM places a carbon-related cost on specified imports according to the emissions associated with their production, with sectors including iron, steel, aluminium, cement, fertilisers, electricity, and hydrogen among those exposed to its initial structure.
The 2025 framework acknowledged US concerns about CBAM and included an EU commitment to work on additional implementation flexibility for American businesses, particularly smaller companies. Washington is now pressing for broader changes as the mechanism develops.
Unlike a conventional customs tariff, carbon-border compliance depends on production data. Importers and overseas manufacturers need information about embedded emissions, production methods, and, where applicable, carbon costs already paid in the country of origin. That makes the administrative infrastructure almost as important as the headline charge.
The same is true of sustainability due diligence. A large multinational may be the entity formally subject to the rule, but evidence gathering can extend across suppliers of metals, chemicals, electronics, components, logistics, and other industrial inputs. Manufacturers can therefore encounter European regulation contractually even when the legal obligation falls elsewhere in the chain.
US objections focus heavily on that extraterritorial effect. Washington argues that companies operating under credible non-EU regulatory systems should not face duplicative European requirements simply because they sell to or operate within the bloc.
Brussels, meanwhile, has to balance those objections against the purpose of the legislation. Exempting foreign companies too broadly could create different compliance expectations for businesses competing in the same European market, while further dilution risks reopening political compromises already made inside the EU.
The dispute consequently differs from a negotiation over a percentage tariff. A customs rate can be altered relatively quickly and applied mechanically at the border. Corporate reporting and due diligence rules are woven into legislation, implementation timetables, data systems, and contractual relationships, making revisions more complicated and potentially slower.
The 2025 framework attempted to cover both types of barrier. Alongside tariffs, it included cooperation on standards, conformity assessment, energy trade, investment, and several non-tariff measures. The current argument demonstrates how much harder the latter category is to define when one side views a rule as legitimate domestic regulation and the other views the same rule as a trade restriction.
US and EU officials are expected to continue discussions over the non-tariff elements of the agreement. Reuters reports that people familiar with the EU position do not expect further concessions on some environmental measures, despite continuing American pressure.
Manufacturers cannot sensibly suspend compliance investment while those talks continue. Reporting systems, supplier questionnaires, emissions calculations, and due diligence processes have to be designed around the rules in force, even though negotiations may subsequently alter their scope.
The transatlantic trade dispute has therefore moved into a less visible phase. Duties still matter, but the next argument is increasingly about which data companies must collect, which suppliers they must examine, and which emissions they must account for before industrial goods reach the border.
