Trade Compliance Guide 2026: Essential Requirements for International Trade Success

International trade compliance isn't just a regulatory checkbox—it's your company's shield against devastating penalties and your passport to global market success. With enforcement agencies imposing record-breaking fines and expanding their reach in 2025, understanding trade compliance has never been more critical for U.S. businesses venturing into international markets.

Quick Takeaways

• Trade compliance protects U.S. economic and national security interests through import/export regulations

• Penalties can reach more than $364,992 per violation or twice the transaction value, whichever is higher (updated 2024)
• Recent enforcement surge: The Bureau of Industry and Security (BIS) brought 26 criminal cases and added more than 340 entities to restricted lists in 2024
• Both exporters and importers face strict documentation and screening requirements

• Voluntary self-disclosure can significantly reduce penalties for violations
• Technology exports face heightened scrutiny with new AI and semiconductor controls

What Is Trade Compliance? Complete Definition and Meaning

Trade compliance is the process that companies and individuals put into place to adhere to all laws, regulations and procedures governing the import and export of goods and services across international borders. For U.S. companies, this means ensuring every international transaction complies with requirements under the Export Administration Regulations (EAR), the International Traffic in Arms Regulations (ITAR), the Foreign Trade Regulations (FTR) and miscellaneous other U.S. government regulations, as well as the laws of destination countries.

International trade compliance encompasses the entire ecosystem of rules that govern cross-border commerce, including:

• Export control regulations and licensing requirements
• Import documentation and customs procedures
• Restricted party screening and sanctions compliance
• Product classification and valuation protocols
• Anti-dumping and countervailing duty regulations

Think of trade compliance as the operating system for international business—it runs in the background of every transaction, ensuring your company can trade globally while staying within legal boundaries.

Test Your Trade Compliance Smarts

Before you dive deeper into the article, take our quick Export Compliance Quiz to see how your knowledge stacks up. You’ll get immediate feedback on what you know, and it might reveal some blind spots you didn’t know you had.

Why Trade Compliance Matters More Than Ever

The stakes have never been higher. Recent enforcement data reveals a dramatic escalation in government oversight:

2024 Enforcement Highlights:

• BIS's Disruptive Technology Strike Force brought 15 new criminal cases
• BIS added more than 340 new parties to the Entity List, one of more than 200 different denied party lists
• The Commerce Department removed its previous financial cap on administrative penalties for export violations; they are now tied directly to the value of those transactions
• BIS imposed a $5.8 million penalty on a global technology company for unauthorized exports

The message is clear: robust compliance programs are no longer optional—they're essential for business survival in the global marketplace.

Export Compliance vs. Import Compliance: Understanding the Difference

While often discussed together, export and import compliance involve distinct requirements and risks:

Export Compliance Essentials

Export compliance focuses on controlling what leaves the United States and where it goes. Key components include:

1. Determining Jurisdiction

Companies need to determine which government agency–and which set of export regulations–have jurisdiction over their products. The Commerce Department’s BIS has jurisdiction over most commercial items under the EAR, while the State Department's Directorate of Defense Trade Controls (DDTC) manages defense articles under ITAR.

2. Classifying Products

In order to comply with the FTR, companies must find the correct 10-digit Schedule B or Harmonized Tariff Schedule (HTS) code for their products and, in most cases, report that data to the U.S. Census Bureau through the Automated Export System (AES). The foreign buyer may also use the first six digits of that code for import clearance.

In addition, companies need to determine if their goods also have an Export Control Classification Number (ECCN) or a U.S. Munitions List (USML) classification code, which is used to determine if an export license is required to ship the goods. While every product will have an HTS or Schedule B code, not every product will have an ECCN or USML classification. However, the only way to know for sure is to search for the correct code.

Shipping Solutions Product Classification Software makes looking for the HTS, Schedule B, ECCN and USML codes easy by allowing you to enter a brief description of the goods. You can try it out for yourself by signing up for a free trial subscription.

3. Screening the Parties in the Transaction

A number of U.S. and other government agencies publish lists of individuals, companies and organizations with whom it is illegal to do business. While there is no requirement to run restricted party screenings of all the parties in an export transaction, there is no other reliable way to ensure compliance.

The International Trade Administration (ITA) publishes the Consolidated Screening List that includes parties from the largest U.S. government lists:

• Entity List (parties subject to license requirements)
• Denied Persons List (prohibited from export transactions)
• Specially Designated Nationals (SDN) List
• Unverified List (requiring additional due diligence)

In most cases the Consolidated Screening List works fine for most exporters in most situations. However, keep in mind that it does not include all of the more than 200 U.S. lists and none of the foreign government or international agency lists. And the Consolidated List is not always reliably updated. See this recent notice on the ITA website:

We are aware that there is an issue with the Consolidated Screening List’s Application Programming Interface (API) functionality, which includes the CSL Search Engine. While the API is still functional, it has not been updating consistently from the source files since April 21, 2025. Any entries or companies that were on the various lists prior to April 21 will be reflected in searches. To search entries or companies added to the lists or updated since April 21, 2025, please visit the lists highlighted under ‘Key Sources’ on our Consolidated Screening List page.

Shipping Solutions Restricted Party Screening Software screens against more than 300 different lists, including all the U.S. lists and lists from the United Nations, European Union, and dozens of other countries. These lists are monitored and updated daily, as necessary, so you are always screening against the most current data. Click here to sign up for a free trial subscription to the software.

4. Identifying If an Export License Is Required

There are four reasons why an item might require an export license:

• Product classification: Determining the correct ECCN or USML, as described above.
• Destination: Consult the Commerce Country Chart with the “reason for control” identified by the product classification.
• End user: Do any of the parties appear on any of the “bad-guy” lists?
• End use: Regardless of what or where you export, if the item is going to be used in a prohibited activity, you must obtain an export license.

Shipping Solutions Export Controls Software makes determining the export license requirement quick and easy. Request a free trial subscription to the software now.

Keep in mind that export compliance essentials apply to more than just physical goods that leave the country. You may be an exporter by transferring knowledge to someone located in another country or even to somebody within the United States. These are called “deemed exports,” and apply when technology that is controlled is shared with a foreign person within the U.S.

Import Compliance Framework

Import compliance ensures goods entering the United States meet all regulatory requirements:

1. Customs Classification and Valuation.

Importers need to find the correct Harmonized Tariff Schedule (HTS) classification for their items. These 10-digit codes determine:

• Applicable duty rates
• Required permits or licenses
• Country-of-origin marking requirements
• Anti-dumping or countervailing duties

2. Documentation Requirements

Essential import documents include:

• Commercial invoice with accurate product descriptions
• Packing list detailing shipment contents
• Bills of lading or air waybills
• Certificates of origin when claiming preferential treatment
• Customs Entry Form 7501

3. Agency Oversight Beyond U.S. Customs and Border Protection (CBP)

Multiple agencies regulate imports:

• FDA: Food, drugs, cosmetics, medical devices
• USDA: Agricultural products, meat, poultry
• EPA: Chemicals, pesticides, vehicles
• CPSC: Consumer products and toys

Technology Export Controls: New Rules for AI and Semiconductors

Recent regulatory developments have significantly expanded controls on advanced technology exports:

AI Model Weight Controls (2025)

For the first time, artificial intelligence model weights are subject to export controls under interim rules published in January 2025. These controls target:

• Large language models exceeding specific computational thresholds.
• AI systems capable of dual-use applications.
• Technology transfers involving model training data.

Semiconductor Manufacturing Equipment

Enhanced controls now cover:

• Advanced lithography equipment
• Etching and deposition tools
• Metrology and inspection equipment
• Software and technology for semiconductor design

Compliance Implications

Companies involved in technology exports must:

• Reassess product classifications under updated ECCNs
• Implement enhanced end-use monitoring
• Strengthen compliance programs for deemed exports
• Navigate complex foreign direct product (FDP) rules

Red Flags and Risk Indicators

Trade compliance involves more than following a checklist for international transactions. It includes keeping your eyes and ears open for any clues that something may not be quite right and then digging into that discomfort a little deeper to see if there is any merit to your concern.

On the export side, BIS calls these suspicions of illegal activities “red flags,” and defines them as “any abnormal circumstances in a transaction that indicate that the export may be destined for an inappropriate end use, end user or destination.”

It is illegal to ignore these suspicions. Instead you should explore the red flags until you are satisfied that everything is above board or you cancel the transaction.

It is impossible to create a complete list of red flags, but BIS does provide some guidance:

Customer Red Flags

• Reluctance to provide end-user information
• Requests for unusual packaging or shipping arrangements
• Payment from unrelated third parties
• Orders inconsistent with known business operations

Transaction Red Flags

• Shipment routing through unusual countries
• Requests for early delivery to specific dates
• Orders exceeding normal commercial quantities
• Declining installation or training services

Product-Specific Concerns

• Interest in capabilities rather than specific applications
• Questions about modifying commercial products
• Requests for products beyond stated business needs

Free Trade Agreements and Preferential Programs

The United States has Free Trade Agreements (FTAs) with 20 countries. While these FTAs have traditionally allowed many goods to enter the United States and the partner countries duty free, the Trump Administration has announced a variety of new tariffs in 2025 that may be applied on goods that qualify under the applicable FTA. In response, many of these countries have or have threatened to impose additional tariffs on U.S. goods.

Companies should monitor the status of these tariffs for FTA and non-FTA eligible goods. Shipping Solutions Import Controls Software provides an up-to-date list of import tariffs and any other import restrictions that apply to products in any country. Sign up now for a free trial subscription to the Import Controls Software.

Updated Penalty Structure: What Violations Cost in 2025

Understanding the current penalty landscape is crucial for risk assessment:

Administrative Penalties (Updated 2024)

• Maximum per violation: $364,992 or twice the transaction value, whichever is greater
• Base penalty calculation: No longer capped for non-egregious violations
• Voluntary disclosure benefits: Can reduce penalties by up to 50% for timely, comprehensive disclosures

Criminal Penalties

• Imprisonment: Up to 20 years per violation
• Fines: Up to $1 million per violation
• Export privilege denial: Up to 10 years for criminal convictions

Real-World Examples (2024)

BIS publishes a PDF guide, Don’t Let This Happen to You!, that cites numerous examples of export violations and the penalties companies have paid as a result. Here are some of those examples:

• California technology company: $3.3 million penalty for exporting controlled items to Russia
• Global manufacturer: $5.8 million penalty for unauthorized exports
• Multiple entities: Export privilege denials ranging from 5-10 years

Now that the Commerce Department has removed caps on the amount of penalties that companies have to pay for export violations, high-value transactions can result in proportionally massive penalties, making compliance programs essential cost-protection measures.

Building Your Trade Compliance Program: 12 Essential Steps

To help ensure compliance with export regulations, companies should create a written export compliance program (ECP), share it widely and review it regularly. If a company’s products are controlled under ITAR, an ECP is mandatory. Even if not required, companies will benefit from improved compliance—and even potential reductions in penalties if accidental violations occur—with an ECP in place and documentation that it has been followed.

Here are 12 steps companies can follow to create an effective compliance program:

1. Secure Management Commitment

Executive buy-in is non-negotiable. Your compliance program needs dedicated resources, clear authority and visible leadership support. Document this commitment in your corporate compliance policy.

2. Conduct Comprehensive Compliance Audit

Assess your current state by:

• Mapping all export processes
• Identifying compliance gaps and vulnerabilities
• Documenting existing controls and procedures
• Benchmarking against industry best practices

Not sure how your current compliance efforts stack up? Take our Export Compliance Quiz to quickly assess your strengths and potential blind spots.

3. Establish Classification Protocols

Develop systematic approaches for:

• Determining jurisdiction: EAR vs. ITAR
• Product classification: Schedule B, HTS, ECCN and USML determinations
• Technology classification: Including software and technical data
• Classification maintenance: Regular review and updates

4. Implement Robust Screening Procedures

Have technology in place for:

• Real-time screening: Against all relevant restricted party lists
• Ongoing monitoring: Regular re-screening of existing customers
• Documentation: Maintaining screening records for audit purposes

5. Develop License Management Systems

Establish procedures for:

• License requirement determination: Four-factor analysis automation
• Application preparation: Complete, accurate submissions
• License compliance: Tracking conditions and expiration dates

6. Create Training Programs

Implement department-specific training covering:

• Sales teams: Customer screening, license requirements, prohibited transactions
• Operations: Proper documentation, marking, shipping procedures
• Legal/Compliance: Advanced regulatory interpretation, enforcement trends

7. Establish Record-Keeping Systems

Maintain comprehensive records including:

• Export documents: Invoices, packing lists, bills of lading, certificates of origin, shipper’s letters of instruction
• Screening documentation: Records of all party checks
• Training records: Completion certificates, materials, updates
• Audit trails: Decision-making rationale, approval workflows

8. Monitor Regulatory Changes

Stay current through:

• Federal Register monitoring: New rules and proposed changes
• BIS/DDTC guidance: Policy clarifications and enforcement priorities
• Industry associations: Shared intelligence and best practices
• Passages: The International Trade Blog: Subscribe for regular updates to the regulations and best practices

9. Implement Technology Controls

For technology companies, additional measures include:

• Deemed export controls: Managing foreign national access
• Encryption registration: Required for certain software products
• Cloud services compliance: Data location and access controls

10. Establish Incident Response Procedures

Develop protocols for:

• Violation discovery: Internal detection and reporting
• Investigation procedures: Fact-finding and documentation
• Voluntary self-disclosure: When and how to submit VSDs

11. Conduct Regular Internal Audits

Schedule systematic reviews covering:

• Transaction testing: Sample-based compliance verification
• Process validation: Ensuring procedures are followed
• System updates: Incorporating regulatory changes

12. Engage Qualified Partners

Select service providers based on:

• Compliance expertise: Demonstrated knowledge of regulations
• Software Implementation: Restricted party screening, export documentation, AES filings
• Industry experience: Understanding your specific challenges

Leveraging Technology for Compliance Excellence

While compliance responsibilities have grown and penalties for no-compliance have increased, there are affordable software solutions that can help companies of all sizes meet these responsibilities and avoid these penalties.

Compliance software rolled out throughout an organization ensures easy access, which increases the likelihood it will be used; consistent results, since all company employees utilize the same tools; and improved record keeping, since the best solutions include an audit trail of all screenings.

Classification Software Benefits

• Improved Accuracy: Reduced human error in product classification
• Gains in Efficiency: Automated lookup and cross-referencing
• Consistency: Standardized classification across your organization

Screening Automation

• Real-time checking: Immediate results for customer onboarding
• Ongoing monitoring: Continuous screening of existing relationships
• Integration capabilities: Seamless connection with CRM and ERP systems

Documentation Management

• Standardized documents: A single source for all trade documents
• Consistent, accurate data: Document details pull from a central database
• Centralized storage: Documents stored in a single location for easy retrieval

Cost-Benefit Analysis of Compliance Investment

The cost of trade compliance depends on the size of a company and the volume of its imports and exports. These costs include the time and personnel required to build and manage a strong compliance program. But these costs don’t have to be outrageous.

If the experience and personnel to create a compliance program don’t exist in-house, outside consulting firms can be used. And while software used to manage these programs can cost hundreds of thousands of dollars or more for large global corporations, easy-to-use software options like those from Shipping Solutions are available for just a few thousand dollars.

While compliance programs require an up-front investment, the cost of non-compliance far exceeds these expenses:

Program Costs

• Personnel: Dedicated compliance staff, training expenses
• Technology: Software licenses, system integration
• External services: Legal counsel, consulting, auditing

Non-Compliance Costs

• Direct penalties: Monetary fines and sanctions
• Business disruption: Denied export privileges, delayed shipments
• Reputation damage: Customer loss, regulatory scrutiny
• Opportunity costs: Missed business due to compliance uncertainty

ROI Considerations

• Risk mitigation: Avoiding catastrophic penalties
• Business enablement: Confident international expansion
• Competitive advantage: Reliable delivery and compliance reputation

Your Next Steps: Taking Action on Trade Compliance

Don't let compliance uncertainty hold back your international growth. Whether you're just starting to export or looking to strengthen existing programs, the key is taking systematic action:

1. Assess your current state with a comprehensive compliance audit
2. Identify priority gaps that pose the greatest risk
3. Implement systematic improvements following the framework outlined above
4. Invest in training and technology to build sustainable capabilities
5. Establish ongoing monitoring to maintain compliance over time

Remember: trade compliance isn't a destination—it's an ongoing journey that requires consistent attention and continuous improvement.

The global marketplace offers tremendous opportunities for U.S. companies willing to navigate the compliance landscape effectively. With proper planning, investment, and execution, your compliance program becomes a competitive advantage that enables confident international expansion while protecting your business from costly violations.

Ready to strengthen your trade compliance program? Explore how Shipping Solutions' Trade Compliance Software can automate and streamline your compliance processes.

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