USA: An International Trade: Export Controls & Economic Sanctions: Highly Regarded Overview

US Export Controls and Economic Sanctions

Compliance with US export controls and economic sanctions imposes complex and often overlapping obligations due to the involvement of multiple government agencies and regulations. These rules can apply not only to US persons and exports from the United States, but also extraterritorially to non-US persons through controls on reexports of US-origin items, foreign-made items incorporating US-origin content and foreign direct products of US technology, software or production equipment. Companies engaging in international trade must navigate a technical and evolving framework, which can apply even to transactions occurring entirely outside the United States and involving only non-US parties. Building effective compliance policies and procedures can help prevent inadvertent violations of these complex rules.

Export controls

Defence export controls

The International Traffic in Arms Regulations (ITAR) are administered by the State Department’s Directorate of Defence Trade Controls (DDTC), applying to manufacturing, exports, reexports and temporary imports of defence articles and defence services, as well as the brokering of defence articles and services. While the Trump administration has pushed to facilitate exports of US defence articles, particularly drones, there are still significant compliance obligations for manufacturers and exporters. The recent implementation of the Australia, United Kingdom, United States (AUKUS) agreement with Australia and the United Kingdom eased some compliance burdens, but are not a “free pass”, as significant areas of technology were unaffected and remain subject to burdensome ITAR licensing requirements.

Dual-use export controls

The Export Administration Regulations (EAR) are administered by the Department of Commerce, Bureau of Industry and Security (BIS), applying to a broad range of dual-use and certain defence-related items. The EAR implement destination-based controls stemming from multilateral export control regimes, such as the Wassenaar Arrangement, but also increasingly impose unilateral controls on items such as hardware for artificial intelligence, and “plurilateral” controls in co-ordination with selected allies, on emerging technologies such as advanced semiconductor manufacturing equipment and quantum computing. The EAR have also expanded unilateral military, weapons of mass destruction (WMD), advanced semiconductor and supercomputer controls in recent years, primarily targeting China.

BIS has expanded its use of restricted party lists, especially the Entity List, targeting hundreds of companies around the world, with a high concentration in China. In September 2025, BIS expanded its list-based controls to cover organisations owned 50% or more by a listed party, although BIS announced soon thereafter that implementation would be suspended until November 2026.

BIS has also created several new foreign direct product rules in the past few years, triggering broader extraterritorial controls – particularly over semiconductor and electronics items – with the primary impact being on China, Russia, Belarus, Iran and Entity List parties such as Huawei.

The EAR impose comprehensive export controls on embargoed destinations, such as Cuba, Iran, North Korea and Russian-occupied regions of Ukraine. In September 2025, BIS partially eased EAR export controls on Syria in conjunction with the termination of comprehensive US economic sanctions, but most controlled items still require a licence.

Deemed exports

Unlike most other countries, the USA regulates the release of technology and source code to foreign persons in the United States (so-called “deemed exports”), as well as to dual/third-country persons in foreign countries, or “deemed reexports”. Compliance can lead to tension with employment and privacy laws. Companies have seen a slow-down in the processing of deemed export licence applications, likely in co-ordination with the Trump administration’s restrictive immigration policies.

Economic sanctions

US economic sanctions are primarily implemented by the Treasury Department’s Office of Foreign Assets Control (OFAC) and the State Department.

Trade embargoes

The United States maintains comprehensive trade embargoes, which expand beyond export control restrictions, against Cuba, Iran, North Korea and Russian-occupied regions of Ukraine, as well as significant restrictions on Belarus, Russia and Venezuela. Increased enforcement of sanctions by the Trump administration has been co-ordinated with military actions to enhance pressure on some of these targets.

However, early 2026 saw an easing of sanctions against Venezuela due to the arrest of Nicolas Maduro, as well as temporary relaxations on energy sanctions against Russia, and even Iran, as an attempt to ameliorate surging oil prices occasioned by Iran’s blockade of the Strait of Hormuz. The Trump administration's increased pressure on the Cuban regime could potentially lead to a possible easing of sanctions, although much of the US embargo is codified by law such that significant relaxations could essentially require regime change in Cuba. What is clear is how rapidly the sanctions landscape can shift in response to geopolitical events.

Asset blocking sanctions

OFAC’s primary sanctions tool is list-based sanctions “blocking” property of a specially designated national (SDN). While many SDNs are designated in connection with comprehensive embargoes, there are also numerous targeted sanctions programmes, with listed persons located worldwide. OFAC has also designated vessels and their operators, such as the so-called Russian “shadow fleet”. OFAC’s SDN List has over 17,000 entries, with restrictions automatically flowing down to entities 50% or more owned, directly or indirectly, by one or more SDN. The breadth of these listings causes significant compliance challenges for financial institutions and international traders, requiring significant investments in screening and due diligence of counterparties and their owners to avoid doing business with sanctions targets.

Sectoral sanctions

OFAC’s toolkit includes more targeted restrictions on the extension of credit, trading in the publicly traded securities of a target and transactions involving specific industry sectors such as energy, information technology, quantum computing, metals and mining, among others. The expansion of sanctions restrictions outside the traditional realms of financial services and exports means that companies in these sectors need to address sanctions risks specific to their industries.

Secondary sanctions

The United States can also impose sanctions on non-US persons who engage in significant business with US sanctions targets. These “secondary sanctions” can be applied even where there is no US nexus and thus greatly amplify the impact of US sanctions. Secondary sanctions vary in severity, but can rise to the level of imposing blocking sanctions on parties who do business with sanctions targets, as with recent designations of companies in China, Turkey and India for dealings in Iranian petroleum products.

Banking and logistics

The involvement of US banks, US dollars, logistics providers and other intermediaries can trigger US sanctions, even if the principal parties to the transaction are not US persons. Indeed, many non-US intermediaries adopt similar risk management approaches to US persons to mitigate potential enforcement or secondary sanctions exposure. Such “de-risking” widens the practical impact of US sanctions and can lead to unexpected obstacles for non-US companies.

Export controls and sanctions enforcement

Violations can result in significant criminal and civil penalties, with recent export controls and sanctions cases imposing multibillion-dollar fines, and with non-US companies being frequent targets of enforcement. Criminal violations can lead to substantial fines, imprisonment and collateral consequences such as debarment from US government contracting. The agencies also have significant civil penalty authority, enforced as “strict liability” violations and carrying maximum penalties of hundreds of thousands of dollars per violation.

The agencies and the US Department of Justice encourage voluntary self-disclosure of violations, which can have a significant mitigating effect on the outcome of enforcement matters, including non-prosecution and warning letters, or significant reductions in monetary penalties. Settlement of such cases can also involve commitments to improve corporate compliance efforts, including the appointment of external compliance monitors.