Trump Pushes to Shield U.S. Companies from EU Sustainability Law in Trade Talks

Former President Donald Trump is pressing the European Union to ease sustainability due diligence rules for American companies, making it a central issue in ongoing transatlantic trade negotiations. The move reflects mounting U.S. business concerns that the EU’s new Corporate Sustainability Due Diligence Directive (CSDDD) and Corporate Sustainability Reporting Directive (CSRD) could impose costly compliance burdens and legal risks.

Passed in 2024 as part of the EU Green Deal, the CSDDD requires companies to monitor and enforce environmental and human rights standards across their global supply chains. It also opens the door to civil liability for climate-related damages and other violations.

The CSRD, meanwhile, expands reporting obligations on greenhouse gas emissions and other ESG factors. Together, the measures are among the EU’s most ambitious attempts to hold corporations accountable for sustainability impacts, but they have sparked backlash from U.S. businesses worried about high costs and exposure to lawsuits.

Trump seized on the issue during renewed trade talks with Brussels this summer. After threatening a 30% tariff on EU imports, he used negotiations as leverage to demand changes, raising the CSDDD directly with European Commission President Ursula von der Leyen during a July meeting in Scotland. A month later, both sides announced a preliminary trade framework, pledging to work toward “reciprocal, fair, and balanced trade.”

The joint statement, released on August 21, included a significant passage: the EU committed to “reduce the administrative burden on businesses” and review liability and climate-transition obligations tied to the CSDDD. It also promised to address U.S. concerns about applying the directive to non-EU firms with strong domestic regulations.

Von der Leyen’s emphasis on cutting red tape has been a hallmark of her second term, especially after rightward shifts in the European Parliament amplified opposition to Green Deal measures. In February, the Commission adopted an “Omnibus Simplification Package” to ease compliance rules, while Parliament continues to debate changes to reporting thresholds and obligations for foreign companies.

Still, the Commission quickly walked back parts of the August deal. A little-noticed Q&A posted on its website the same day clarified that no special exemptions for U.S. firms were planned. Instead, it said the EU had only “agreed to exchange views” with Washington and reaffirmed that “this cooperation does not lead to any changes to EU domestic rules nor will we grant U.S. companies more favourable treatment.”

Sustainability advocates welcomed the clarification, warning that weakening the CSDDD would undermine its core purpose. But the ambiguity leaves room for interpretation. Analysts note that if U.S. companies ultimately win relief, it could extend to other foreign businesses as well.

The CSRD, which similarly applies to many non-EU firms, was notably absent from the joint statement. Yet it too is under revision, with proposals already on the table to scale back requirements for international companies, changes that could align with Trump’s goals.

For now, the EU Parliament is expected to focus primarily on easing burdens for European businesses when it finalizes its CSDDD position in October. U.S. concerns are more likely to surface behind closed doors during trilogue negotiations later this year. Any concessions to Trump, observers say, may not be visible until the final legislation is adopted in December.

Trade-talk pressure on CSRD and CSDDD scope shapes how much extraterritorial reach ultimately survives, and it directly affects what non-EU multinationals should plan for on reporting infrastructure. Our ESG-strategy and sustainability-due-diligence teams help clients build reporting infrastructure robust across whatever the final scope looks like.