USA: An Introduction to International Trade: Export Controls & Economic Sanctions

US presidents use export controls and economic sanctions to advance their foreign policy agendas, including safeguarding and promoting national security and economic objectives. In turn, these regulations impact how businesses operate internationally, shaping the flow of capital, goods, technology and services across borders.

After three years focused on international co-ordination in response to Russia’s invasion of Ukraine, the Trump administration may reorient parts of the US approach to export controls and sanctions while continuing previous administrations’ policies in others. In addition to tracking the normal cadence of regulatory changes, businesses engaged in cross-border transactions should also prepare for policy shifts with little-to-no advanced warning.

Aligning Export Controls with Trump’s America First Trade Policy

On Inauguration Day, President Trump directed the Secretaries of State and Commerce to review the US export control system and recommend how to eliminate “loopholes” that allow the transfer of strategic goods, technology, and services to geopolitical rivals and their proxies.

In April, the administration concluded that “[e]xport controls should be simpler, stricter, and more effective, while promoting US dominance in AI and asserting global technological leadership”. President Trump’s nominee for Assistant Secretary of State for Political-Military Affairs echoed this sentiment during his May confirmation hearing, saying that if confirmed, one of his key focus areas would be streamlining US controls on defence items and services.

To date, the administration has not undertaken significant export control reforms, but further action is expected from both the Commerce and State Departments in 2025.

Widely considered a blueprint for the current administration’s policies, Project 2025 advocates:

• redesignating China and Russia to more prohibitive export licensing groups;
• eliminating licence exceptions;
• broadening foreign direct product rules;
• reducing the de minimis threshold;
• tightening deemed export rules to prevent critical technology transfers to certain foreign nationals;
• eliminating licence exceptions for standards-setting activities; and
• adding more entities to the Entity List.

Project 2025 also calls for reforms to the export licensing process.

Recalibrating the Belarus and Russia Sanctions

Since 2022, the United States and its allies have imposed unprecedented sanctions on Russia and Belarus, including prohibitions on new investment in Russia, transactions related to Russian sovereign debt, and certain services being provided to or for the benefit of persons in Russia; export controls on both dual-use and high-priority items destined for Belarus or Russia; and thousands of new sanctions designations both in Russia and beyond.

Although the sanctions on Belarus and Russia remain in place, the Trump administration is expected to adjust the sectoral sanctions, targeted asset freezes, and export controls related to Belarus and Russia as part of its attempt to bring an end to the war in Ukraine. If Russia remains unwilling to end the war, however, the United States could exert further pressure by announcing new sanctions.

Even if the United States lifts some of its existing sanctions on Russia and Belarus, other allies may not follow suit, leaving businesses with varying compliance obligations across the jurisdictions in which they operate.

Continuing to Focus on China and Iran

The Trump administration views China as the United States’ top economic and geopolitical adversary. And so, sanctions and export controls are expected to continue to focus on China, including efforts to align trading partners with US priorities while negotiating other trade agreements. China-related export controls are expected to target emerging technologies, particularly in the artificial intelligence, advanced semiconductor, quantum computing and cybersecurity sectors.

President Trump has also ordered his administration to apply “maximum pressure” on Iran, which is expected to include a focus on sanctions and export controls circumvention and product diversion to Iran.

Continuing to Increase Civil Enforcement

Although the Department of Justice has not identified export control and sanctions enforcement as a white-collar priority, civil enforcement is expected to continue increasing. In 2024, the Office of Foreign Assets Control imposed almost USD50 million in civil penalties on 12 companies for sanctions violations, and the Bureau of Industry and Security (BIS) imposed over USD10 million in penalties for export control violations.

Earlier this year, the Commerce Secretary warned industry to expect a “dramatic” increase in export controls enforcement, including higher penalties. BIS is also expected to continue its antiboycott enforcement efforts after imposing almost USD400,000 in penalties on four companies in 2024.