US government pushes back against key EU climate law, threatening billions in trade

On October 22, 2025, the US Department of Energy joined Qatar in an open letter criticizing the EU’s Corporate Sustainability Due Diligence Directive, known as the CSDDD. Their argument: the law threatens energy affordability, discourages investment, and could disrupt the flow of American liquefied natural gas to a continent that desperately needs it.

What the CSDDD actually requires

The CSDDD requires companies operating in or selling into the EU to identify, prevent, and address adverse human rights and environmental impacts throughout their operations. That includes everything from raw material sourcing to final delivery.

The directive also imposes civil liability provisions, meaning companies can face legal consequences for failing to meet these standards. Climate transition plans are another requirement, forcing firms to map out how they’ll align with environmental targets.

The trade math gets ugly fast

The Carbon Border Adjustment Mechanism, or CBAM, which taxes imports based on their carbon intensity, could cost US exporters $4.7 billion annually. The EU’s Deforestation Regulation, which restricts products linked to forest destruction, carries an estimated $8.6 billion annual impact on American trade.

The CSDDD adds another layer of compliance costs on top of those existing measures. US officials have framed the whole package as a series of non-tariff barriers, essentially arguing that the EU is using environmental rules to protect its own market while penalizing American competitors.

Energy security complicates everything

Since the outbreak of the war in Ukraine, Europe has been scrambling to replace Russian natural gas. American LNG has filled a significant portion of that gap.

The US and EU have an ongoing trade negotiation framework that includes a commitment for Europe to purchase $750 billion in US energy by 2028. US energy companies worry that compliance requirements under the directive could increase the cost of exporting LNG to Europe, making American gas less competitive against suppliers from countries that don’t face the same regulatory burden.

Qatar’s involvement in the October 22 letter underscores that concern. As one of the world’s largest LNG producers, Qatar shares Washington’s view that the CSDDD could distort global energy markets.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.