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The Era of Aggressive Export Enforcement Has Arrived. Are You Ready?

Written by Michael Ford, International Operational Trade Consultant, Tradebridge Consulting 

For many years, U.S. exporters viewed export enforcement as something that happened to companies that intentionally broke the rules. That assumption is becoming increasingly dangerous. 

The Bureau of Industry and Security (BIS) has made it clear that export enforcement is entering a new phase. The agency has requested a dramatic increase in funding, plans to more than double the size of its enforcement organization, and intends to nearly triple the number of enforcement officers stationed overseas. At the same time, BIS is working more closely than ever with the Department of Justice (DOJ) to pursue both civil and criminal export violations. 

The message from Washington is unmistakable. 

Companies are now expected to demonstrate that they have effective export compliance programs, not simply claim they have one. 

Recent enforcement actions involving Robert Bosch GmbH and Applied Materials illustrate how quickly compliance mistakes can become multi-million-dollar enforcement cases. 

Case One: Bosch 

Good Intentions Do Not Replace Strong Compliance 

In July, BIS imposed approximately $36 million in civil penalties against Bosch after determining that two of its subsidiaries exported foreign-produced sensor products and software to Huawei, a company on the BIS Entity List, without the required authorization under the Foreign Direct Product Rule (FDPR). 

Although DOJ declined criminal prosecution because Bosch voluntarily disclosed the violations, fully cooperated with investigators, and aggressively remediated its compliance program, the company still paid a significant civil penalty. 

BIS Identified Areas of Concern 

According to BIS, several compliance weaknesses contributed to the violations: 

  • Compliance personnel lacked sufficient staffing and technical expertise to interpret the increasingly complex Foreign Direct Product Rule. 
  • Internal warning signs raised by third parties were not properly investigated. 
  • The company relied on an incorrect interpretation of FDPR requirements. 
  • Existing compliance procedures failed to identify exports requiring BIS authorization.

 

What Bosch Did Right 

Once the issue was discovered, Bosch responded quickly by: 

  • Voluntarily disclosing the violations. 
  • Cooperating fully with DOJ and BIS. 
  • Expanding its trade compliance organization by adding 66 compliance employees. 
  • Updating policies, procedures, and internal controls.

 

The result was a significant reduction in penalties and avoidance of criminal prosecution. 

Case Two: Applied Materials 

A Misunderstanding of the Regulations Can Still Become a Quarter-Billion Dollar Case 

Applied Materials reached one of the largest export settlements in BIS history after the agency determined the company committed 56 violations involving shipments of U.S.-origin semiconductor equipment through South Korea to Semiconductor Manufacturing International Corporation (SMIC), an Entity List company in China. BIS assessed a civil penalty exceeding $252 million. 

The company believed that completing additional assembly work in South Korea transformed the products into foreign-made items outside the scope of the Export Administration Regulations (EAR). 

BIS disagreed. 

The agency concluded that production had already begun in the United States and that the products remained U.S.-origin items requiring export authorization before reexport to SMIC. 

Lessons from Applied Materials 

Several important compliance lessons emerge from this case: 

  • Do not rely on Customs concepts, such as “substantial transformation,” when making export control determinations under the EAR. 
  • Production planning and supply chain decisions should always include export compliance review before implementation. 
  • Engineering, logistics, sales, procurement, and compliance teams must evaluate regulatory impacts together before changing manufacturing or distribution models. 
  • Foreign assembly does not automatically remove U.S. export jurisdiction. 

BIS Is Expanding Enforcement 

The Bosch and Applied Materials cases are occurring as BIS receives unprecedented support from Congress and the Administration. 

The agency has requested: 

  • An increase in enforcement funding from $122 million to $301 million 
  • Growth from 299 enforcement positions to 669 
  • Expansion of overseas enforcement officers from 25 to 65 
  • Additional investigators focused on global supply chains and critical technologies 

In testimony before Congress, Under Secretary Jeffrey Kessler stated that BIS enforcement resources need to be “orders of magnitude larger” to better protect U.S. technology and national security. 

For exporters, this means: 

  • More investigations 
  • More end-use verification 
  • More scrutiny of exports routed through third countries 
  • Increased attention on technology transfers 
  • Greater coordination between BIS, DOJ, Customs, and international enforcement partners 

What U.S. Exporters Should Do Now 

Waiting until an enforcement inquiry arrives is no longer a viable strategy. 

Companies should use the remainder of 2026 to evaluate whether their export compliance program reflects today’s enforcement environment. 

Tradebridge Consulting recommends that exporters focus on several priority areas: 

Review Your Product Classifications 

Confirm ECCNs remain accurate as products evolve and regulations change. 

Reevaluate Restricted Party Screening 

Ensure Entity List, Military End User, Military Intelligence, and other restricted party screening procedures are functioning as intended. 

Understand Your Supply Chain 

Know where products are manufactured, assembled, integrated, tested, and shipped. Manufacturing changes may affect export jurisdiction and licensing requirements. 

Strengthen Foreign Direct Product Rule Reviews 

Many companies continue to underestimate the FDPR’s reach, particularly for products manufactured outside the United States. 

Educate Beyond the Compliance Department 

Engineering, purchasing, logistics, sales, finance, customer service, and executive leadership all influence export decisions. 

Test Your Compliance Program 

Perform internal audits before regulators do. Document corrective actions and continuously improve policies and procedures. 

Prepare for Voluntary Self-Disclosure 

Develop an investigation and escalation process before an issue occurs. Prompt disclosure and cooperation can significantly reduce enforcement consequences when violations are identified. 

Looking Ahead

The next several years are likely to produce the most active export enforcement environment the United States has seen in decades.

As geopolitical tensions continue to reshape global trade, BIS is expanding both its authority and its enforcement capabilities. Companies that invest now in stronger compliance programs, better training, and proactive risk assessments will be better positioned to protect their business, their reputation, and their ability to compete globally.

Export compliance is no longer simply a regulatory function.

It has become a strategic business requirement.

About Tradebridge Consulting

Tradebridge Consulting helps U.S. exporters strengthen export compliance programs, improve internal controls, conduct independent compliance assessments, develop practical operating procedures, and prepare organizations for today’s rapidly evolving export enforcement environment.

Whether your organization is building a compliance program from the ground up or enhancing an existing one, our goal is simple: help you identify risk before regulators do.