WASHINGTON — The United States is escalating pressure on the European Union over something businesses cannot see at the border: regulations Washington says can be just as costly as tariffs.
U.S. officials are pressing Brussels to scale back European environmental, supply-chain and corporate-reporting requirements that can reach American companies doing business in the EU. The dispute marks the next phase of the transatlantic trade fight, shifting attention from the tariff rate charged when a product enters Europe to the regulatory costs companies face once they operate there.
At the center of Washington’s objections are the EU’s Corporate Sustainability Reporting Directive, known as CSRD, and its Corporate Sustainability Due Diligence Directive, or CSDDD. The rules can require companies to disclose extensive environmental and social information and, in some cases, scrutinize risks throughout their global supply chains.
U.S. Ambassador to the European Union Andrew Puzder says those requirements place excessive burdens on American companies and extend European rules beyond Europe’s borders. Washington is arguing that such regulations function as non-tariff barriers — costs or restrictions that can make foreign goods and companies less competitive even when conventional import tariffs have been reduced.
The dispute follows the U.S.-EU trade framework reached in 2025. With much of the attention at the time focused on tariff commitments, Washington is now pushing Brussels to deliver on what it sees as the other half of the bargain: reducing regulatory barriers affecting U.S. businesses.
That distinction matters for companies because a lower tariff does not necessarily mean lower costs.
A manufacturer could receive favorable tariff treatment and still face substantial expenses tracing suppliers, documenting environmental effects, collecting emissions data, auditing contractors and preparing sustainability reports required to remain in the European market. Those obligations can then flow down from major corporations to smaller suppliers that may never have expected to fall under European regulation.
Washington has also challenged the EU’s Carbon Border Adjustment Mechanism, which places a carbon-related cost on certain imported goods based on their emissions profile. The U.S. argues that requirements of this kind can disadvantage American exporters even though they are presented as environmental policy rather than traditional trade restrictions.
Europe has already moved to soften portions of its regulatory system, including narrowing some sustainability requirements and delaying certain deadlines. It has also adjusted controversial rules involving methane emissions and deforestation.
But Washington says the changes do not go far enough.
Brussels, meanwhile, is drawing a line around what it considers its right to establish its own environmental, corporate-governance and consumer-protection standards. European officials have indicated they are willing to continue trade discussions but do not view EU regulatory autonomy as something Washington can dictate.
That sets up a much more complicated trade conflict than a fight over a tariff percentage.
Tariffs are relatively easy to identify. A company knows what rate applies to an imported product and can calculate the expense. Regulatory barriers are harder to measure because the cost can be spread across legal departments, consultants, auditing systems, supplier contracts, software, reporting requirements and operational changes.
For American companies selling into Europe, that means the most important trade number may no longer be the tariff printed on a customs schedule.
It may be the cost of complying with the rules waiting on the other side of the border.
The U.S. and EU are expected to continue negotiations over non-tariff issues stemming from their broader trade framework, making corporate regulation one of the next major tests of whether Washington and Brussels can prevent their tariff truce from turning into a wider regulatory trade war.
JBizNews Desk | Washington
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