As the European Union attempts to export its heavy-handed regulatory bureaucracy across the globe, Chinese President Xi Jinping told it no. These sweeping EU mandates, known as the Corporate Sustainability Due Diligence Directive and the Corporate Sustainability Reporting Directive, are blatant attempts by failed social engineers in Brussels to regulate companies into oblivion.
President Donald Trump stood with our companies and drew a clear line in the sand by signaling his absolute position that Europe must repeal these directives before they harm global growth.
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This economic battlefield takes on new urgency when viewed alongside Trump’s competition with China.
EU PLANS TO SEEK US PARTNERSHIP TO REDUCE RELIANCE ON CHINESE CRITICAL MINERALS
While American companies are being squeezed by European bureaucrats demanding intrusive supply chain audits, Beijing has counterattacked with its own powerful legal shield. Under China’s recent Article 13 regulations, the Chinese government has explicitly prohibited any entity from conducting supply chain-related investigations or information collection within its borders. The exact environmental, social, and governance audits, carbon footprint mapping, and compliance due diligence required by the European directives are now effectively illegal under Chinese law.
Trump’s recent successful visit to Beijing highlighted the immediacy of this global regulatory showdown. During his face-to-face meetings with Chinese leadership, it became obvious that China views radical environmental and social governance mandates as tools of economic warfare and has no intention of playing along. Trump saw firsthand that a firm, nationalistic defense of domestic commerce is the only language that global competitors respect, and he can use the momentum from his trip to formulate an aggressive response that protects American workers.
The language in Article 13 is intentionally broad, covering everything from supply chain mapping that identifies critical nodes to questionnaires and on-site inspections of Chinese suppliers by foreign buyers. Beijing is flatly telling global corporations not to comply with Europe’s mandates. This creates an unsustainable and dangerous dilemma for American multinational firms. If a U.S. company attempts to satisfy European regulators by auditing its suppliers in China, it risks triggering swift prosecution from Beijing for violating state provisions. If the company respects Chinese law, it faces ruinous compliance penalties from the European Union. American businesses are trapped in a regulatory vise between European overreach and Chinese resistance.
Trump has the unique authority and the necessary leverage to shatter this trap. By signing a targeted executive order, the president can explicitly protect American companies by declaring that they do not have to comply with the extraterritorial demands of foreign directives. This executive action would establish a firm national standard, making it clear that foreign capitals do not possess the right to dictate how American enterprises govern their operations or manage their global supply chains. It would shield our domestic industries from billions of dollars in useless compliance costs and prevent foreign entities from stunting American innovation and destroying American jobs.
The U.S. cannot sit idly by while a foreign power attempts to force its failing economic models onto our businesses. American voters overwhelmingly reject these left-wing environmental regulations and want the administration to protect domestic interests. Bipartisan congressional leaders are pushing back. Senate Banking Chairman Tim Scott (R-SC) and House Financial Services Chairman French Hill (R-AR) have already urged the administration to push back against this overreach. Any future trade negotiations with the EU must be entirely conditional on the total abandonment of these extraterritorial rules.
THE GREAT DANGER OF ALLOWING CHINA TO CO-MANAGE GLOBAL ORDER
The ultimate objective is to ensure that America calls the shots in the global economy. China has already recognized the danger of Europe’s regulatory imperialism and has insulated its own economy through strict defensive laws such as Article 13. The U.S. must act with equal or greater resolve to defend its competitive edge.
An executive order blocking these directives would send a definitive message to Brussels that their era of global regulatory overreach is over, ensuring that American freedom and prosperity remain completely secure.
Matt Mowers is a former Trump administration official and senior adviser to the EU-US Forum.
