BRUSSELS — What began as a push to free Europe’s businesses from crippling rules has morphed into yet another tactic to appease Donald Trump. 

Since taking office, the U.S. president has repeatedly threatened to hike tariffs on EU goods unless the bloc agrees to roll back some of its laws that also apply to American companies.

That presents Brussels with a dilemma. If it bows to the U.S. pressure, it risks ending up with strict regulations that only apply to European businesses — potentially destroying their competitiveness. Conversely, if it scraps the rules altogether, it abandons key aims like digital sovereignty and environmental protection.

Enter the simplification agenda, Brussels’ new plan to get the best of both worlds.

Cutting red tape is one of the few areas of policymaking on which EU countries largely agree; in fact, they want more of it. Later this week, European leaders meeting in Brussels will instruct the European Commission to speed up its work “as a matter of utmost priority, on all files with a simplification and competitiveness dimension,” according to draft conclusions obtained by POLITICO. 

Driving home that message, 19 EU leaders — including Friedrich Merz of Germany, Emmanuel Macron of France, Giorgia Meloni of Italy and Donald Tusk of Poland — have issued a presummit appeal for “a systematic review of all EU regulations to identify rules that are superfluous, excessive, or unbalanced.”

In a letter, obtained by POLITICO, they also called on Brussels to dismantle outdated rules, demanded a “constant stream” of simplification measures and urged self-restraint when it comes to new legislation.

Still, the simplification drive is being spun as a way to address some of Washington’s concerns with what it sees as regulatory overreach by Brussels. 

“Since Trump is willing to swallow a number of jokes — he doesn’t look too closely at it anyway — if we can say to him, ‘Donald, thank you very much, it’s thanks to you that we’ve cleaned things up a bit,’ why not?” asked Pascal Lamy, a former EU trade commissioner and head of the World Trade Organization.

Sweeping rollback

In a bid to bring struggling European industries back from the brink, Commission President Ursula von der Leyen has made deregulation — or “simplification” — the North Star of her second term. In less than 12 months, her Commission has come up with plans to cut much of the red tape crafted during her first mandate, touching on almost all areas of EU law, from defense and agriculture to digital rules and the environment. 

At first, the logic was straightforward: Fewer rules would be good for European companies struggling to remain competitive against their U.S. and Chinese rivals. 

Now, the simplification push comes as a diplomatic gesture — to smooth relations with Washington after Trump made it clear that U.S. companies shouldn’t be bound by European rules he has denounced as discriminatory. 

Under the trade deal von der Leyen struck with Trump at his Scottish golf resort in July, the Commission pledged that its green rules would “not pose undue restrictions on transatlantic trade.” The list agreed by the two sides included Europe’s rules on supply chain oversight, sustainability reporting, a carbon border tax and rules aimed at preventing the import of goods produced on deforested land. All have already been the target of simplification measures launched by the Commission.  

Explaining the strategy, Danish Foreign Minister Lars Lokke Rasmussen likened it in an interview with POLITICO to a Kinder Egg — an Italian-made children’s treat with chocolate on the outside and a toy on the inside. Cutting red tape is in Europe’s “own self best interest. But at the same time, it also serves others’ interest as well,” explained Rasmussen, whose country holds the presidency of the Council, the bloc’s intergovernmental branch.

Others say it’s not so clear cut. 

“We can’t say on the one hand that we’re willing to pay for American strategic protection in terms of tariffs, and on the other hand that we’re not going to change our regulations for that, neither on data, nor on DMA, DSA, nor everything else that Americans criticize about what they see as our hyper-regulation,” Lamy said, referring to the twin pillars of EU tech regulation, the Digital Markets Act and the Digital Services Act. 

The Commission stressed that while Washington and Brussels have agreed to look at ways to cut red tape, “this will not lead to a lowering of EU standards or legislation,” said Olof Gill, deputy chief spokesperson for the Commission. 

“The EU has been firm on defending our fundamental principle — our legislative framework and our regulatory autonomy are not up for negotiation,” added Gill, whose remit covers trade. 

Leaders jump in

The letter from the 19 EU leaders intensifies the pressure on the EU executive from the bloc’s leading economies to keep deregulating — above all from Macron and Merz. Backed by their largest businesses, the two leaders have echoed U.S calls for the EU to ditch its supply chain oversight directive.

But the European debate has the added benefit of having — apparently — convinced Trump’s new ambassador to Brussels, Andrew Puzder, that the EU’s drive to slash red tape is in its own essential interest. 

“Chancellor Merz and President Macron have both said it should be repealed … not because that’s in America’s best interest. They’re saying it’s the best interest of Germany and France,” Puzder told a recent event in Brussels, referring to the supply chain rules.

For a veteran like Lamy, the simplification imperative arose from internal EU pressure following strategy recommendations by former Italian Prime Ministers Mario Draghi and Enrico Letta. The former leaders warned that Europe must become more competitive or face the “slow agony” of decline.

“If we look at the history of these simplification packages, they were entirely generated within the EU by pressure from employers,” Lamy said. 

But even with the political wind in her sails, delivering on simplification won’t be a pleasure cruise for von der Leyen. 

Negotiations on the first simplification package — aimed at cutting green reporting obligations for companies — nearly destroyed the coalition of political groups that elected her to a second term, while efforts to simplify Europe’s farming policy and budget have sparked another backlash from the agriculture sector. 

National calls for massive cuts to EU rules have also drawn criticism from EU decision-makers who are reluctant to see trade talks or corporate interests derail the bloc’s green agenda. 

“No one should be mistaken, we will not lower these standards because there is no competitiveness in a race to the bottom,” said Teresa Ribera, the Commission’s No. 2 and top competition regulator.

Nor are European lawmakers giving up on the “Brussels effect” — whereby rules set by the EU set a standard for how business is done internationally.

That EU rules should apply to foreign companies is “a fundamental element of … Europe’s normative power,” said Pascal Canfin, a centrist member of the European Parliament, who has worked on several of the simplification packages. 

Hans von der Burchard and Nette Nöstlinger contributed to this report from Berlin. This story has been updated.