CSDDD: EU Red Tape Undermines America’s Manufacturers

A sweeping new European Union regulation could saddle America’s manufacturers with costly red tape—undermining U.S. sovereignty and manufacturing growth here at home.

What it is

A mandate that reaches across the Atlantic

The CSDDD forces companies to identify and mitigate potential social and environmental risks across every stage of a product’s life cycle — from sourcing to disposal.

Who’s covered

Extraterritorial impact

U.S. companies with more than €1.5 billion in net annual EU turnover would be directly subject to the CSDDD.

Supply-chain reach

Extended impact

Those companies will be responsible for the actions of their direct business partners and will have to assess the risks posed by their indirect business partners if there is a prospect of an adverse impact. As a result, the directive’s requirements could stretch deep into manufacturers’ supply chains, implicating small, privately held and non-EU businesses.

Why it matters

Sweeping mandates, real risk to manufacturers

The directive would impose sweeping due-diligence requirements on U.S. companies with EU ties — and even those only indirectly connected through supply chains.

Compliance squeeze

The mandate’s scope would introduce significant operational complexity, compliance costs and the potential for bottlenecks and delays throughout the complex, global manufacturing supply chain.

Liability risk

The CSDDD would expose manufacturers to significant legal liability, as the directive allows EU nations to impose penalties of up to 3% of a company’s global turnover.

“If the EU wants to continue basically destroying their own economies and their own companies, they can do that, but they don’t have permission to do that globally.” The Honorable Doug BurgumSecretary of the Interior

What’s happening

Where things stand on the CSDDD

The EU’s Corporate Sustainability Due Diligence Directive, initially approved by the Council of the European Union in 2024, has prompted calls from both U.S. and European companies, international business organizations and several EU nations for EU policymakers to scale back this unworkable and extraterritorial mandate.

December 2025

Trilogue process

Following negotiations between the European Parliament, the European Commission and the Council of the European Union, the Parliament approved an agreement to simplify the directive on Dec. 16, 2025. While the EU made significant modifications to reduce potential compliance costs, the directive still poses a threat to U.S. manufacturers.

Timeline

EU nations must act

Member states are required to translate the directive into national law by July 2028. Companies must comply by July 2029.

What’s next

Changes needed

The NAM will monitor future developments and encourage U.S. policymakers to continue to press their EU counterparts for changes to the CSDDD.

CSDDD watch

Important Updates

What’s at stake

Higher costs, less U.S. control

The CSDDD would pile onto an already heavy load — subjecting America’s manufacturers to job-killing European red tape and ceding U.S. regulatory authority.

$350B+

in annual regulatory costs U.S. manufacturers already shoulder at home — before the CSDDD adds more.

Modernization at risk

The CSDDD would undermine the Trump administration’s progress on regulatory modernization — a priority the NAM has championed from the start.

“If you make it too risky and too expensive to do business here, that gas will go elsewhere. We don’t want to see that happen… CS3D, in European regulations — it is an absolute existential risk to affordable energy in Europe.” The Honorable Chris WrightSecretary of Energy

What’s next

Pressing for a workable outcome

President Trump has rightly flagged the CSDDD as a threat to the trading relationship between the U.S. and the EU, and the U.S.–EU framework agreement announced in August 2025 prioritizes addressing concerns about the impact the CSDDD would have on U.S. companies.

Damage remains

While meaningful revisions have been made to the CSDDD, the EU has not addressed some of its most damaging aspects — including the extraterritorial provision that would apply to manufacturers in America and their suppliers.

The NAM’s ask

The NAM urges U.S. diplomats to keep pressing EU officials for a repeal of the CSDDD, an exemption for U.S. companies, or limits on the directive’s reach to activities inside Europe.

Have your say

The European Commission is currently seeking public feedback on the CSDDD implementation guidelines. Submit your feedback by August 14, 2026.

Submit feedback to the EU

The bottom line

“The CSDDD would impose significant, extraterritorial burdens on America’s manufacturers. Manufacturers appreciate the Trump administration standing up for our industry on the world stage, and we urge both American and European policymakers to protect U.S. companies from this costly and unworkable burden.” Charles CrainNAM Managing Vice President of Policy