Why Brussels Is Refusing to Rewrite Its Green Supply-Chain Rules

The European Union on Friday pushed back against a fresh US demand to rewrite the bloc's green supply-chain rules, insisting that its regulatory framework is not open for negotiation.

Andrew Puzder, the US ambassador to the EU, had called on Brussels to align the Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD) with the trade deal struck between Washington and Brussels last year. He posted a US government document warning that Washington would "take any actions necessary" to address unreasonable burdens on American commerce if no solution is found.

European Commission spokesperson Arianna Podesta said talks on tariff and non-tariff issues were constructive, but added that neither the EU's rules framework nor its regulatory autonomy was up for negotiation. The CSDDD requires large companies to address human rights and environmental harms in their supply chains, while the CSRD compels climate and emissions disclosure.

Brussels has already narrowed the scope of both laws, delaying implementation and exempting smaller firms, but US officials argue the concessions do not go far enough. The dispute is widening beyond the two directives: Puzder separately attacked the EU's carbon border adjustment mechanism (CBAM) as a tariff in substance, and a White House report flagged the EU among trading partners at risk of illegal transshipment from China.

The US-EU Trade Friction Behind CSDDD, CSRD and CBAM

What the United States Is Actually Pressing For

The US position is that the CSDDD and CSRD have extraterritorial reach and impose due-diligence and reporting costs on American companies competing in the European market. The argument is not simply about paperwork: it is about the cost of doing business in the EU and whether Washington can win an exemption or softening for US exporters.

That is a reasonable reading of Puzder's demand and the US document, which frame the rules as "unreasonable burdens" rather than environmental or human rights safeguards. The US is treating the directives as non-tariff barriers, a negotiating category that can be traded against market-access concessions.

Why Brussels Is Holding Its Regulatory Line

The Commission's public response leaves little room for a direct rewrite of the CSDDD or CSRD. Podesta's statement that regulatory autonomy is not negotiable reflects both legal reality and political positioning: the rules have passed the EU's legislative process and have already been watered down once. Agreeing to a US demand now would reopen internal EU divisions and weaken the bloc's credibility on climate and human rights enforcement.

That does not mean the EU is refusing all engagement. It continues to discuss tariff and non-tariff issues with Washington and says it shares the US objective of tackling customs fraud. The likely path is negotiation on implementation, timing and enforcement rather than on the existence of the rules themselves.

How CBAM and the Transshipment Report Fit Together

Puzder's criticism of the carbon border tax and the White House report on Chinese transshipment show that the green-rules dispute is only one front in a broader trade friction. By linking the CSDDD, CSRD, CBAM and customs fraud, the US is building a case that EU regulatory ambitions and trade facilitation practices are harming American interests and enabling Chinese evasion.

For businesses, the practical consequence is that EU market access is becoming more contested even in routine compliance areas. A company could face both stricter EU sustainability requirements and increased US scrutiny of how goods enter the European market.

What Exporters Should Do While the EU and US Position

For exporters and compliance teams with exposure to the EU market, the immediate signal is that the existing rules remain the baseline.

  • Do not assume a US-negotiated carve-out. The Commission has said the CSDDD and CSRD framework is not up for negotiation, so US firms should continue compliance planning against the current scope, including the already-agreed exemptions for smaller companies.
  • Treat CBAM as an operating cost. Puzder's criticism of the carbon border adjustment mechanism does not suspend it; companies exporting carbon-intensive goods to the EU should keep modelling the related liabilities.
  • Stress-test transshipment documentation. The White House report says it will use artificial intelligence to detect illegal routing of goods from China, and the EU is among the partners flagged. Importers and logistics teams should ensure country-of-origin and customs records can withstand enhanced scrutiny.
  • Watch for implementation delays rather than repeal. The EU has already delayed and narrowed both directives, so the most realistic change from future US pressure is further timing or scope adjustments, not elimination of the rules.

Risk & Opportunity Assessment

Commercial RiskHighThe US document explicitly threatens actions to remove "unreasonable burdens on US commerce," and the CSDDD/CSRD impose extraterritorial due-diligence and disclosure costs on US companies exporting to the EU.
Competitive RiskMediumUS businesses argue the directives harm their ability to compete in the EU market; if Washington wins concessions, EU firms and other non-US competitors would continue to bear compliance costs, shifting relative cost burdens.
Regulatory RiskHighThe EU has stated its regulatory autonomy is not negotiable while the US says it will do what is necessary, creating a standoff over CSDDD, CSRD, CBAM and transshipment enforcement.
Reputation RiskMediumThe EU is being publicly linked to Chinese tariff evasion via transshipment in a White House report, which could complicate the bloc's position even though the Commission says the risk sits within legitimate trade flows.
Technology DisruptionLowNo fundamental technology shift is at stake, though the US says it will use artificial intelligence for transshipment detection, which could alter customs enforcement practices.
Commercial OpportunityMediumA negotiated implementation or scope adjustment could reduce compliance costs for US exporters, and the EU has already shown willingness to delay and exempt smaller firms.