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Heightened Export Controls, Sanctions Enforcement in a Second Trump Administration

In the wake of renewed commitments to national security and economic protectionism, most attention on the second Trump administration’s trade policy has been focused on the levying of tariffs on goods imported into the U.S. Perhaps overlooked, however, is the administration’s vow to strengthen enforcement of export controls and sanctions violations. Secretary of Commerce Howard Lutnick – in comments at the Bureau of Industry and Security (“BIS”) Update Conference in Washington, D.C., in March, and other forums since – has underscored the current administration’s desire to intensify oversight and penalties for companies that fail to comply with the Export Administration Regulations (“EAR”).¹

This heightened focus on export control enforcement and on the penalties for EAR violations highlights the need for all companies to maintain airtight, risk-based export compliance programs. Beyond Secretary Lutnick’s warning at BIS, the Trump administration has also promised to expand restrictions that cover subsidiaries of Chinese tech firms already facing U.S. export controls and sanctions.² Separately, the U.S. has added dozens more international firms to its export controls lists, alleging these firms have sought American capabilities in supercomputing, artificial intelligence and quantum technology for military use.³

These policy actions further underscore the importance of regularly assessing compliance programs to confirm they address changes in risk profiles due to ever-changing regulations and evolutions in business operations, including through M&A. Foreign-based companies should reassess whether their products and technology are subject to U.S. export control jurisdiction, as the U.S. has consistently expanded the extraterritorial reach of the EAR in recent years. This is particularly the case through the proliferation of more Foreign Direct Product Rules, which operate to pull certain items under U.S. jurisdiction – even when located and made outside the U.S. – if they are the direct product of certain U.S. technology and software. The same applies for products going to certain destinations, end users or end uses.⁴

This intent signals a heightened emphasis on preventing sensitive U.S. technologies and intellectual property from reaching adversarial nations and nonstate actors. The enforcement uptick should remind organizations to double down on compliance programs and related efforts. Even those with seemingly robust programs in place would be wise to reevaluate their potential exposure. Companies need to ensure that they have implemented effective controls to address nuanced risks.

What are export controls and why do they matter?

Export controls are a critical mechanism used by the U.S. government to regulate the transfer of goods, technology and software to further national security and foreign policy objectives. The Department of Commerce, through BIS, plays a key role in administering these regulations, working alongside agencies like the Department of the Treasury and its Office of Foreign Assets Control; the Department of State, including the Directorate of Defense Trade Controls, which administers the International Traffic in Arms Regulations; and the Department of Justice to pursue criminal violations of U.S. export control and sanctions laws. These agencies, among others, enforce trade restrictions, investigate potential violations and impose penalties on those who attempt to circumvent the rules.

Promises of aggressive enforcement mark concerns about technology leakage, especially in sectors like semiconductors, artificial intelligence and quantum computing. Secretary Lutnick’s comments at BIS highlighted that companies involved in international trade must take extra precautions to prevent their products and technologies from ending up in the hands of entities acting on behalf of adversaries. Firms should conduct thorough due diligence on downstream trading partners, too.

A key area of concern remains the role of diversion networks in circumventing trade controls. BIS enforcement officials at the conference detailed how certain nation-state actors have facilitated the transfer of controlled items to adversaries. In response, BIS has pledged to ramp up investigations and impose steeper penalties on companies found to be complicit in such violations. These actions align with broader efforts to curb competing nations’ access to critical technologies that could enhance military and intelligence capabilities.

For companies that export, understanding the mechanics of export controls is essential. The EAR outlines which products and technologies are subject to restrictions, with items classified under the Commerce Control List based on factors like technical characteristics, destination country, end user and intended end use. Exporters must determine whether their goods require a license, a process that involves assessing a variety of factors, including the risk of diversion and the potential for military applications.

Enforcement of export controls involves a combination of administrative, civil and criminal penalties. Companies found in violation may face hefty fines, loss of export privileges – which can jeopardize revenue and business relationships – and, in severe cases, criminal prosecution. Recent enforcement actions have demonstrated that BIS and other regulatory bodies are willing to impose multimillion-dollar fines and blacklist organizations that engage in illicit trade practices. Given the increased scrutiny, businesses must invest in compliance training, enhance internal auditing processes and seek legal guidance when necessary.

What’s Next

Looking ahead, the export control landscape is expected to evolve further under the Trump administration’s stated commitment to tightening trade restrictions. Potential legislative changes and executive actions might introduce stricter licensing requirements and expanded enforcement mechanisms. Even inadvertent violations will not get a pass – companies must remain proactive, regularly review their compliance frameworks and stay informed about policy updates.

Secretary Lutnick’s remarks on enhanced focus on export control enforcement serves as a stark warning to businesses participating in international trade. With rising penalties and increased regulatory scrutiny, organizations should take decisive action: evaluate and pressure-test existing export compliance programs; identify weak links and overlooked risks, including end uses and users; and implement targeted improvements to address gaps, and reduce exposure, while aligning with national security objectives.⁵

Footnotes:

1: “The Update Conference on Export Controls and Policy,” Bureau of Industry and Security

2: “U.S. Plans Wider China Tech Sanctions with Subsidiary Crackdown,” Bloomberg (May 30, 2025)

3: Elaine Kurtenbach, “U.S. Adds Chinese Tech Firms to its Export Control List, Says They Sought U.S. Knowhow for Military Use,” AP News (March 26, 2025)

4: Sidley Austin LLP, “New U.S. Export Controls on Advanced Computing Items and Artificial Intelligence Model Weights: Seven Key Takeaways,” Sidley Austin LLP (January 16, 2026)