The ability of Americans to engage freely and fairly in international commerce is a critical element in the American economy. Since our founding, the United States has leveraged our rich natural resources and our unique ingenuity to compete globally. But our continued ability to compete is now under direct threat from the European Union (EU).
The EU is attempting to impose sweeping, extraterritorial regulations on U.S. companies through the Corporate Sustainability Due Diligence Directive (CSDDD), alongside its recently adopted AI Act. Together, these overreaching rules risk constraining the growth of artificial intelligence, raising costs for American firms, and slowing the cutting-edge research and deployment that has been a hallmark of America’s global technological advantage for decades.
Under the CSDDD, American companies could be forced to conduct expansive human-rights and environmental due diligence well beyond their direct operations simply to access the European market. These obligations would spike operational expenses and regulatory compliance burdens and could force some companies to lay off staff or scale back operations.
The requirements mandated by the CSDDD go far beyond U.S. law, substitute European policy preferences for American democratic decision-making, and impose legal uncertainty that discourages innovation.
It’s almost as if the CSDDD was specifically designed to hinder America’s competitive advantages over Europe.
Businesses in the natural resources and manufacturing sectors are the most at risk from Europe’s regulatory agenda. Agriculture, energy, mining, timber, and advanced manufacturing form the backbone of the U.S. economy; however, they are all under threat if CSDDD takes effect. These sectors are also essential for fueling the growth of advanced technologies, including AI, cloud computing, and data center infrastructure. Maintaining and, in some cases, expanding access to these supplies is critical to the economic survival of many communities across the country.
AI has the potential to improve lives through medical breakthroughs, safer infrastructure, smarter logistics, and more efficient energy use. Yet, by saddling U.S. innovators with vague, expansive obligations, Brussels risks slowing the very technologies that could deliver environmental and social benefits for people worldwide. Beyond the expansive compliance requirements imposed by the CSDDD, European AI regulations may force U.S. companies to face additional obligations due to the immense resources required to generate, store, and process high-volume, high-impact data necessary for AI systems. It will chill investment, delay deployment, and divert resources from innovation to bureaucratic compliance.
The stakes are particularly high for America’s energy-intensive AI infrastructure. Maintaining a robust U.S. energy supply is essential to the continued growth of data centers, computing hubs, and next-generation digital infrastructure, to say nothing of energy affordability. Foreign sustainability regimes with extraterritorial reach like CSDDD pose significant risks to the United States’ competitiveness and technological leadership.
This is not cooperation; it is regulatory overreach. In fact, the trade agreement framework reached between the U.S. and EU back in August explicitly states that the Europeans would address American concerns about CSDDD. Yet as it currently stands, EU politicians are pressing forward with this extraterritorial regulation, violating an agreement they made with President Trump.
That’s why Members of Congress like Rep. Andy Barr (R-KY) are cautioning against CSDDD which would force America to import “Europe’s green energy regulatory framework” that could harm the “all of the above energy approach needed to win the AI race.” With little hope of changing the direction EU politicians are going, it’s time for Congress to act on legislation to protect U.S. businesses from having to adhere to CSDDD. Rep. Scott Fitzgerald (R-WI) and Sen. Bill Hagerty (R-TN) have such legislation in the works and policymakers should prioritize its passage before European laws begin to harm American companies.
Leadership in AI will not be achieved by importing Europe’s regulatory model. It will be secured by unleashing American ingenuity, backed by reliable energy, clear rules, and a regulatory system accountable to the American people—not foreign bureaucracies.