Recently, the White House announced a massive trade deal with the European Union—one that’s set to bolster the U.S. economy, increase competitiveness, and promote American energy.
The White House says the new deal will see the EU purchase $750 billion in U.S. energy and make new U.S. investments totaling $600 billion—all by 2028. This will strengthen America’s energy dominance goals, reduce European reliance on adversarial sources, and narrow our trade deficit with the EU.
In the deal, the U.S. and Europe also recognized a series of major commercial agreements across key sectors, including energy and semiconductors, that will further expand U.S. exports to the European market, benefiting workers and businesses back home.
This is a substantial victory, and one that all reasonable commentators are celebrating—but there are still issues that need to be resolved. Of those, perhaps most concerning is the EU’s heavy-handed regulatory overreach—and, specifically, its flagship regulation, the Corporate Sustainability Due Diligence Directive, or CSDDD.
Adopted in July 2024, the CSDDD imposes extensive supply chain disclosure and compliance requirements on both EU and non-EU companies, including American firms that operate in the European market. CSDDD also mandates that companies identify, prevent, and mitigate environmental and human rights abuses throughout their entire supply chain, based on standards not ratified by the U.S. Congress.
When it comes to this directive, the term “regulatory overreach” is an understatement.
Warnings about such oppressive regulations began in June 2023, when Senate Banking Committee Chair Tim Scott (R-S.C.) and Rep. James Comer (R-Ky.) sent letters to both the Department of the Treasury and the Securities and Exchange Commission. Those letters requested information on the Biden administration’s activities—coordinated with the EU—on environmental, social, and governance and climate-related measures that significantly impact U.S businesses.
Clearly, their efforts to enact change failed, and the CSDDD remains in place to this day.
If found in violation of the CSDDD, U.S. companies generating over €450 million in revenue (equivalent to about $522 million) within the EU would face penalties of up to 5% of global revenue, taxing revenue made outside of Europe. This substantially threatens American companies, workers, and energy competitiveness.
The directive also risks over $975 billion in U.S.–EU trade, which could particularly harm American oil and gas exporters, who shipped over $64 billion in energy products to Europe in 2024.
As our largest single export category, American energy allows the EU leverage against Russian influence and bullying. That’s been especially true since the Russian invasion of Ukraine in 2022, making it a critical tool to advance American interests abroad.
CSDDD’s burdens will further divert resources away from research, development, innovation, and hiring, particularly hurting small U.S. businesses in global supply chains.
This regulatory overreach threatens American sovereignty by imposing EU rules on U.S. firms without any domestic legislative process, echoing concerns previously raised with the SEC’s now-abandoned climate disclosure rule. Not only that, but the CSDDD mandates are based on U.N. and Organisation for Economic Co-operation and Development standards not ratified by Congress—which again threatens American legislative sovereignty.
U.S. lawmakers, including Scott and House Financial Services Chair French Hill, are well aware of this problem and have expressed concern that applying unratified international principles to U.S. companies is both illegitimate and harmful to American industry. In one letter, the two wrote, “[b]eyond economic risks, CSDDD undermines U.S. jurisdictional sovereignty. U.S. corporate governance law distinguishes between publicly and privately held companies, with regulatory obligations calibrated accordingly.”
In a letter this past spring, the U.S. Chamber of Commerce urged Treasury Secretary Scott Bessent and National Economic Council Director Kevin Hassett to ensure EU leaders limit the directive’s scope to within Europe, warning of harm to competitiveness and global partnerships.
Sen. Bill Hagerty (R-Tenn.) also introduced the Prevent Regulatory Overreach from Turning Essential Companies into Target Act of 2025, aimed at shielding American companies from EU regulatory overreach and reaffirming U.S. legislative authority.
With energy and economic growth top priorities for the Trump administration, resisting foreign mandates like CSDDD is critical to safeguarding our national interests, enhancing national energy security, and preserving the U.S.–EU alliance on balanced and mutually beneficial terms. The victories taking place in ongoing tariff negotiations must be leveraged to this end.
Accepting the CSDDD would be foolish, running counter to the entire thrust of the Trump administration energy strategy. The CSDDD is the epitome of others taking advantage of America, both economically and politically, and it should not stand.
This is a fight we cannot afford to lose.
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