The US government has threatened to “take any action necessary” if the EU fails to ease the effect of green reporting and due diligence legislation on companies from the United States.

The threat comes in a “comment letter” published after remarks made by Andrew Puzder, US ambassador to the EU, in which he said on social media that it was “time for the EU to deliver” on a commitment to ensure the rules “do not pose undue restrictions on transatlantic trade”.

The EU has pushed back. Arianna Podesta, a European Commission spokesperson, said: “We have been very clear and consistent on the fact that neither our rules framework nor our regulatory autonomy are up for negotiation.”

The clash is over two controversial pieces of legislation: the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).

Both have extra-territorial effects that US government officials, politicians and business groups have complained about in increasingly bitter terms.

Puzder argues that the EU agreed to reduce the impact on US companies, as part of the US-EU Framework Agreement on Reciprocal, Fair and Balanced Trade agreed in July last year.

In the comment letter, the US makes it clear that, despite amendments made to both CSRD and CSDDD in 2025, “those reforms failed to fully address the US concerns…”.

‘Costly and onerous’

It adds: “The directives’ extraterritorial reach and costly and onerous supply chain due diligence obligations will adversely impact the ability of US businesses to compete on a level-playing field in the EU market.”

The US particularly dislikes the EU’s application of “double materiality”—the idea that companies should report not only on the impact of sustainability developments on business prospects, but also the impact of business decisions on the environment and society.

US law mandates only “single materiality”.

The US seeks limits on the scope of the CSRD and CSDDD and a block on the use of penalties against any US business or subsidiary based on international revenues.

There is also a request for changes to the way civil liability claims against a US company would proceed.

Puzder writes on X.com: “Extraterritorial provisions harm American business and workers, but it is not just the US that will suffer.

“Unless the EU changes course, these directives will burden EN and non-EU businesses of all sizes—and European consumers are the ones who will ultimately foot the bill.”

The CSRD and CSDDD have support among many observers in the EU. German academic Andreas Rasche says on LinkedIn: “It is the right of the EU to regulate non-EU (including US) companies with significant business on EU markets based on its own terms.

“There is really no reason why US companies should receive special treatments compared with other non-EU nations.”

‘Do not budge’

Tsvetelina Kuzmanova, an expert at the Cambridge Institute of Sustainability Leadership, urges the EU: “Do not budge under pressure.

“Human rights abuses and environmental degradation are not negotiating chips in a trade dispute.

“Asking companies operating in our market to identify and address serious impacts in their value chains does not prevent them from trading with Europe.”

The comment letter and Puzder’s remarks likely form the opening salvo in what will be an ongoing exchange over the CSRD and CSDDD. It remains unclear how the US might escalate; tariffs have been a go-to lever in other disputes.

However, it is clear that governance is now a point of conflict between two of the world’s most significant trading partners.