Embedding “Reasonable Care” in U.S. Trade Compliance: A Practical Guide for Businesses

Written by Gil Armstrong, CEO of GNA Trade Consultants, LLC

In the realm of U.S. trade compliance, “reasonable care” is more than a legal expectation—it’s a business commitment. Introduced through the Customs Modernization Act (Mod Act), these standards place the burden of due diligence squarely on importers and exporters. But what does “reasonable care” mean in practice, and how can companies communicate and institutionalize it across all levels?

Communicating “Reasonable Care” Internally

To embed reasonable care into a company’s DNA, it must be clearly defined and consistently reinforced. Here’s how to communicate it effectively:

• Define It in Plain Language: Reasonable care means taking proactive, informed steps to ensure compliance with customs laws—such as accurate classification, valuation, and origin reporting.
• Use Real-World Examples: Illustrate with scenarios like misclassifying a product or failing to screen a denied party, and the consequences that follow.
• Tailor Messaging by Role:
  • Executives: Focus on risk mitigation and reputational protection
  • Operations: Emphasize process accuracy and documentation
  • Legal/Compliance: Highlight regulatory obligations and audit readiness
• Integrate into Onboarding & Training: Make reasonable care a core part of compliance training for all new hires and refreshers for existing staff.

Key Elements of Reasonable Care Documentation

Creating robust documentation is essential for demonstrating compliance. Here’s what to include:

• “Reasonable Care Statement” signed by leadership to reinforce accountability and commitment.
• Detailed Product Descriptions: Maintain clear, accurate, and complete descriptions for all imported/exported goods, including technical specifications, materials, and intended use.
• Tariff Classification Records: Document the rationale and sources used for determining the Harmonized Tariff Schedule (HTS) codes, including any binding rulings or expert opinions consulted.
• Valuation Methodology: Record how the customs value was determined (transaction value, deductive value, etc.), including supporting invoices, contracts, and payment records.
• Country of Origin Determination: Keep evidence of how the country of origin was established, such as manufacturing records, supplier affidavits, and certificates of origin.
• Partner Government Agency (PGA) Documentation: Retain all required permits, licenses, and certificates for goods regulated by agencies like FDA, EPA, USDA, etc.
• Denied Party Screening Logs: Document the process and results of screening all parties against government restricted or denied party lists.
• Internal Controls and Audit Trails: Maintain records of internal audits, compliance reviews, and corrective actions taken in response to identified issues.
• Training Records: Keep documentation of compliance training provided to staff, including dates, attendees, and training materials.
• Written Policies and Procedures: Include up-to-date compliance manuals, SOPs, and workflow diagrams that outline responsibilities and processes for trade compliance.
• Risk Assessment and Mitigation Plans: Include periodic risk assessments, identified risks, and steps taken to mitigate them.

 

Embedding Reasonable Care into Company Business

For reasonable care to thrive, it must be embraced from the top down. Here’s what every level of the organization needs to understand:

Leadership

• Set the Tone: Demonstrate commitment through policy endorsement and resource allocation
• Risk Awareness: Understand the financial, legal, and reputational risks of non-compliance
• Empower Compliance Teams: Ensure they have authority, budget, and access to decision-makers

Middle Management

• Operationalize Compliance: Translate policies into daily workflows and team responsibilities
• Monitor & Report: Track compliance metrics and escalating issues promptly

Frontline Staff

• Know the Rules: Understand how their tasks relate to customs regulations
• Ask Questions: Encourage a culture of curiosity and escalation when in doubt

Third Parties

• Align Expectations: Ensure brokers, freight forwarders, and suppliers understand and follow your compliance standards

 

Why It Matters

Failing to exercise reasonable care can lead to:

• Penalties and fines
• Shipment delays or seizures
• Loss of import/export privileges
• Damage to brand reputation

By embedding reasonable care into your company’s business, you not only meet regulatory expectations, but you also build a resilient, trustworthy business.

Take Away

Reasonable care isn’t a checkbox—it’s a mindset. When clearly communicated, thoroughly documented, and embraced across all levels, it becomes a powerful safeguard for your company’s trade operations. Think of it as your compliance compass: always pointing toward integrity, diligence, and informed decision-making.