EU Tariffs and Sweeping Climate Directives Threaten Global Trade

Regulatory pincers, foreign and domestic.

The European Union (EU) is facing off with the United States over tariffs, war with Russia, and increased regulations governing corporations doing business on the continent. Some claim globalist NGOs exert undue influence over modern Europe through the union: Pending laws that seek to impose environmental and social rules on all US and international companies resemble a globalized regulatory structure. The showdown is underway.

EU Battles Russia and US

France and England have taunted Russia by proposing to send troops into Ukraine, prompting the Kremlin to warn such moves would lead to inevitable war between Russia and the US-led NATO military alliance. Allies of President Putin allegedly even threatened French troops in Ukraine “would suffer the fate of Napoleon’s army,” which endured a horrible defeat in its failed invasion of Russia in 1812.

European defiance of President Trump’s call to end the Ukraine conflict is paralleled by an escalating trade war over proposed tariffs against European goods, prompting counter-threats. Most recently, the EU has said it might suspend intellectual property rights of major US tech companies, including Elon Musk’s Starlink satellite network. The American service sector is particularly vulnerable: The US boasted a trade surplus of €109 billion in services in 2023 but a deficit in goods of €157 billion.

Lurking behind this economic friction are sweeping environmental and social justice regulations unilaterally enacted by the EU in 2024 through its Corporate Sustainability Due Diligence Directive (CSDDD). On April 3, the EU Parliament delayed implementation of this legislation until July 26, 2027, but the CSDDD is essentially an effort to implement global laws demanding climate change goals of the Paris Accord, collective bargaining rights, minimum wages, and a myriad of other requirements including civil liability for violations on large international corporations, their suppliers and distributors.

International Imbalance

This is a major challenge to the structure of international law, and further undermines global trade as many nations, including the United States, seek to bolster domestic production and supply systems following the devastating economic impacts of the COVID-19 pandemic. Trade conflicts threaten global and US economic health, recalling the exacerbating effects of the 1930 Smoot-Hawley Tariff Act in the US, which contributed to a worldwide drop in trade of 65% during America’s Great Depression. The CSDDD will likely persist as a hindrance to US-EU trade, as it essentially seeks to compel entities selling goods within the EU to comply with laws in all operations, exporting animal and human rights and climate change targets onto the nations of the world.

This is where the CSDDD smacks of globalist control while potentially shrinking global trade. A similar tension is unfolding within the US, where individual states have increasingly enacted sales restrictions within their own borders that impact other states where products are manufactured. Animal rights policies such as “cage-free” egg standards and swine housing push up consumer prices outside of the regulating jurisdictions by compelling producers in other states to comply.

Colonial America grappled with similar conflicts as the original thirteen colonies enacted frictious policies following independence from England but before adopting the US Constitution in 1798. This adversely impacted interstate and international trade, especially regarding debtor relief laws that impinged on out-of-state creditors and, thus, their willingness to extend credit terms widely. The nascent nation suffered an economic downturn, in part attributed to state initiatives that undercut credible international treaties.

The result of these tensions was a federal Constitution that barred states from “impairing the obligations of contracts” in Article 1, Section 10 (directed at state debtor relief laws) and the Commerce Clause, granting the US Congress the power “to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” This authority allowed Congress to abolish the slave trade with other countries on January 1, 1808, the earliest possible date. State laws regulating farm animal care threaten to disrupt federal power to maintain a “free trade zone” between the several states: The EU is creating a similar conflict at the international level.

Globalist “Directives”

The EU’s “Directive” to American businesses is expansive, “requir[ing] companies to mitigate their negative impact on people and the planet.” It requires awards of damages for various harms under international law, mandates authorization of a trade union or “non-governmental human rights or environmental organisation or other non-governmental organisation …  to bring civil liability actions to enforce victims’ rights” (section 84), and states that its objectives are to “better exploit[] the potential of the single market to contribute to the transition to a sustainable economy….”

This global legal structure through corporate compliance is then extended under definitions of “chains of activities” to include “a company’s upstream business partners related to the production of goods or the provision of services by that company” and “downstream business partners related to the distribution, transport and storage of a product of that company.” Article 22 requires companies to employ a “transition plan for climate change mitigation…compatible with the transition to a sustainable economy… in line with the Paris Agreement.” The plan “must contain… time-bound targets related to climate change for 2030 and in five-year steps up to 2050 based on conclusive scientific evidence.”

Thus, US companies and anyone doing business with them will be required to comply with UN Agenda 2030 and the Paris Agreement, of which the US is not a party. The EU plan seeks to compel all 50 US states to comply with its unilateral “directives” despite US laws, economic impacts, or conflicts of US jurisprudence with international rights standards incorporated into the directive. The nonprofit Heartland Institute states:

“Because of this focus on companies’ supply and value chains, it is possible that nearly every business in the world will ultimately be forced to comply with the European Union’s draconian policy initiatives, transforming global economic and social activity.”

The federal government is simultaneously battling states’ rights at home and European globalists. Regardless of whether the EU closes its doors to Starlink or battles Donald Trump over reciprocal tariff rates, America is in for a long-term showdown with woke Europe.