At the Paris AI Summit and Munich Security Conference earlier this month, Vice President JD Vance stunned Europeans with an unapologetic defense of American tech innovation, values, and energy dominance in the face of regulatory threats abroad.

He decried the abandonment of free speech across the continent, as well as the regulatory morass sprouting out of Brussels that chokes American tech firms with legislation such as the Digital Services Act (DSA) and GDPR. But tech isn’t the only industry in the EU’s crosshairs.

European bureaucrats have busied themselves with penalizing and extracting value from US tech firms, and now they’re preparing to do the same for any American firm within European borders, using ESG and climate change as a justification for massive fines and reporting requirements.

At the same time in Germany, this weekend’s elections gave a resounding victory for conservative Friedrich Merz, who has signaled he’ll undo the subsidized energy rollback and nuclear power shutdowns that have vastly increased costs for German industries.

But while Europe reorients itself, the Trump-Vance Administration can no longer only play witness to the EU’s failed energy policies; they must actively fight back.

Energy Sanity Must Take Hold

The shuttering of nuclear power plants, mixed with restrictions on energy exploration and an overreliance on intermittent renewables make the EU a poor place for hosting data centers the West needs. Even more concerning is European policy itself, such as the EU’s creeping attempt to unlawfully enforce its “Environmental, Social, and Governance” (ESG) sustainability agenda on US energy providers and the consumers that rely on them.

While the framework of ESG has been mostly abandoned by firms in the US, thanks in large part to the election of Donald Trump and the exiting of asset manager, BlackRock, from the UN-backed Net Zero Alliance, the EU is just getting started on enforcement of its own “Green New Deal” it adopted in 2022.

Beginning in January 2025, firms are required to comply with the European Union’s Corporate Sustainability Reporting Directive (CSRD), where they will be forced to disclose their environmental impacts, social and governance policies, and outline their path to committing to 2050 net-zero emissions goals set by the Paris Climate Accords.

Companies are required to disclose this information if they meet two of the following criteria: more than 250 employees, an excess of 40 million euros in net turnover, or holding above 20 million euros in total assets.

These disclosure rules are also forced on non-EU companies with turnover exceeding 150 million euros on the continent. It is estimated that over 50,000 companies will be coerced into submitting this data to European regulators.

Most remarkably, American firms subject to these EU rules will be required to disclose this data on all global operations, even with only a modest presence in the EU. And if they opt not to comply, they could be penalized as much as 5 percent of global turnover.

It’s a shocking financial shakedown of productive international firms and borders on being a sort of new-fangled European imperialism using nothing more than regulations and fines. 

This would saddle US energy giants with huge fines to operate in Europe and service European consumers, but also ding retail, pharmaceutical, computing, food, and research companies. The EU is trying to ESG disclosures and net-zero plans from US firms like Amazon, Google, Proctor & Gamble, Pfizer, and even Tesla. 

That amounts to EU bureaucrats and pencil pushers forcing costing sustainability directives on operations in Michigan, Florida, Nebraska, and beyond. Vance and Team Trump should seize the available opportunity to draw a line in the sand on this behavior and challenge Europe’s ESG regime. 

How are US employers and lawmakers supposed to explain to their constituents that an intentionally complex European directive is why their lives have become mired in red tape? 

How can Trump and Vance respond?

Commerce Secretary Howard Lutnik has already intimated to lawmakers that he may use “trade tools” to defang the EU’s ESG compliance rules, but even more may be necessary.

As Europe has fallen behind the United States and China on technological innovation, it has supplanted its industrial capability with regulatory prowess, evident from the European Commission’s championing of digital rules that have so far hamstrung US tech firms, including the DSA, DMA, GDPR, and the incoming AI Act.

Having lost the battle to provide affordable energy and innovative tech to its citizens, the EU has contented itself to enforce costly rules internationally that will subsidize their government’s suppression of domestic industry. 

Who needs enemies when you have friends like this? 

When Americans voted at the ballot box in November of 2024, they voted overwhelmingly against the climate policies of the Biden administration and the EU’s ESG agenda. The SEC has withdrawn their previous climate-related disclosure policies. The firms that once championed the climate goals of the UN have since abandoned them. 

The EU’s own domestic companies have pressured Brussels to abandon its further ESG reach in order to boost competitiveness, and it just may happen. Negociations are ongoing to defang the CSRS and narrow its scope to ensure Europe and remain competitive.

But the Trump-Vance Administration must remain stern.

The European Union’s ESG agenda imposes heavy costs and burdens on American producers and consumers, and US leaders must put America first by opposing these rules at every step. Everyday Europeans, not just Americans, stand to benefit the most from a Trump administration that challenges the EU’s regulatory regime. 

Yaël Ossowski is the deputy director of the Consumer Choice Center.