INTERNATIONAL TRADE LAW
U.S. Trade Compliance Laws & Regulations Explained
Trade compliance means following the U.S. federal laws that control how goods, technology, and money cross the border — chiefly customs rules on what you import, export controls on what you ship out, and economic sanctions on who you can deal with. No single statute covers it; the obligations are split across five agencies, each with its own regulations and penalties. This guide maps that landscape so you can see which rules apply to your business and where the real risk sits.
The Five Agencies That Regulate U.S. Trade
Most trade compliance work comes down to knowing which agency governs a given transaction. Five do the bulk of it.
| Agency | Department | What it controls | Core regulations |
|---|---|---|---|
| CBP (Customs and Border Protection) | Homeland Security | Imports: classification, valuation, origin, duties, recordkeeping | Title 19 (Tariff Act of 1930); 19 CFR |
| BIS (Bureau of Industry and Security) | Commerce | Export of “dual-use” goods and technology | Export Administration Regulations (EAR), 15 CFR 730–774 |
| DDTC (Directorate of Defense Trade Controls) | State | Export of defense articles and services | International Traffic in Arms Regulations (ITAR), 22 CFR 120–130 |
| OFAC (Office of Foreign Assets Control) | Treasury | Economic sanctions and embargoes | 31 CFR 500-series |
| Census Bureau | Commerce | Export data filing (the EEI in AES) | Foreign Trade Regulations, 15 CFR Part 30 |
A single shipment can touch several of these at once. Exporting a controlled machine to a sanctioned buyer, for example, raises BIS licensing, OFAC screening, and Census filing obligations simultaneously — which is why compliance is organized by program, not by department.
Import Compliance: CBP and the Duty of “Reasonable Care”
On the import side, the law puts the burden on you. Under the Customs Modernization Act, the importer of record must use “reasonable care” to declare merchandise correctly (19 U.S.C. § 1484). CBP doesn’t classify or value your goods for you; you do, and you answer for errors. Four declarations drive most of the risk:
- Classification. Every product gets a 10-digit code from the Harmonized Tariff Schedule, which sets the duty rate. Misclassification is the most common — and most expensive — import error. See our step-by-step classification guide.
- Valuation. Duties are usually charged on the transaction value of the goods, computed under rules drawn from the WTO Customs Valuation Agreement (19 U.S.C. § 1401a).
- Country of origin. Origin drives duty preferences, marking requirements, and exposure to trade remedies like anti-dumping duties.
- Recordkeeping. You must keep import records for five years from the date of entry (19 U.S.C. § 1508). When CBP runs a customs audit, those records are the whole game.
Export Controls and Sanctions: What You Ship and Who You Ship To
Exporting is regulated by what the item is and where (and to whom) it’s going. Three regimes do the work:
The EAR, administered by BIS, control “dual-use” items — commercial goods and technology with possible military application. Each item gets an Export Control Classification Number (ECCN) on the Commerce Control List, which, combined with the destination, tells you whether you need a license.
The ITAR, administered by DDTC, govern defense articles and services on the U.S. Munitions List — a stricter regime with registration and licensing requirements of its own.
OFAC sanctions sit on top of both. Before any export, you screen the parties against restricted-party lists to avoid dealing with a blocked person or embargoed country — the heart of denied-party screening. Like CBP, BIS and DDTC require exporters to keep records for five years (15 CFR 762; 22 CFR 122.5).
The Penalties for Getting It Wrong
Customs penalties scale with culpability. Under 19 U.S.C. § 1592, the maximum civil penalty depends on whether CBP finds negligence, gross negligence, or fraud:
| Culpability | Standard | Maximum civil penalty |
|---|---|---|
| Negligence | Failure to use reasonable care | Up to 20% of the goods’ domestic value |
| Gross negligence | Actual knowledge or reckless disregard | Up to 40% of the goods’ domestic value |
| Fraud | Voluntary and intentional violation | Up to 100% of the goods’ domestic value |
There is a powerful escape hatch. A valid prior disclosure — telling CBP about a violation before it opens a formal investigation — caps your exposure to the lost duties plus interest in most cases (19 U.S.C. § 1592(c)(4)). Export violations carry their own steep civil and criminal penalties under the EAR and ITAR. The practical takeaway: self-identifying and fixing an error almost always beats waiting for the government to find it.
Frequently Asked Questions
What is trade compliance, in one sentence?
It is the practice of following the U.S. laws governing imports, exports, and sanctions — administered mainly by CBP, BIS, DDTC, OFAC, and the Census Bureau — so your cross-border transactions are lawful and your records can prove it.
Who is legally responsible for import compliance?
The importer of record. The law requires that party to use “reasonable care” in classifying, valuing, and declaring goods, and it bears the penalties for errors even if a customs broker or supplier made the mistake.
How long do I have to keep trade records?
Five years is the common rule across the board: five years from the date of entry for imports (CBP), and five years for export records under both the EAR and the ITAR.
What’s the single most important habit for staying compliant?
A written compliance program with someone clearly accountable for it. Most penalties trace back to a gap no one owned — an unchecked classification, an unscreened party, or records no one kept.
Trade compliance failures are rarely dramatic; they’re usually a missed classification or an unscreened buyer that surfaces years later in an audit. Reidel Law Firm gives importers and exporters a plain-English compliance memo, on a flat fee, that maps your obligations to your actual transactions. Get a trade compliance memo.
