Trade compliance is a maze of regulations, deadlines, documentation, and international standards. Businesses involved in cross-border trade face a daunting array of rules—and missing just one can lead to severe penalties or supply chain disruptions.

Many companies assume they’re in the clear once the goods ship. But small oversights often go unnoticed until audits, legal disputes, or costly errors expose the risks. That's why businesses often bring in an international trade lawyer early—not just for defense, but for prevention.

1. Misclassification of Goods Under HTS Codes

Every product entering or leaving the U.S. must be classified under the Harmonized Tariff Schedule (HTS). This classification determines duties, admissibility, and regulatory requirements. However, improper classification is one of the most common and costly compliance errors.

• Why It Happens: Product descriptions can be vague or inconsistent, and internal teams often rely on outdated or imprecise codes. Even minor product changes can alter the correct classification.
  
  

• What’s the Risk: A wrong code could mean higher duties, incorrect country-of-origin labeling, or import bans. It can also trigger audits and retroactive penalties if discovered by Customs and Border Protection (CBP).
  
  

• How a Lawyer Helps: A trade lawyer evaluates classification decisions using legal precedents, rulings, and case-specific facts. They also help you request binding rulings from CBP to avoid future disputes.
  
  

2. Origin Marking and Free Trade Agreement Errors

Determining a product's country of origin is not always straightforward, especially when goods are assembled or processed across multiple countries. Origin affects both tariff eligibility and labeling.

• Why It Happens: Manufacturers often rely on supplier declarations without verifying transformation rules or regional content thresholds, particularly under free trade agreements like USMCA.
  
  

• What’s the Risk: Improper origin claims can lead to loss of preferential duty rates and seizure of goods. In serious cases, they may trigger civil or criminal fraud investigations.
  
  

• How a Lawyer Helps: They examine the rules of origin, advise on labeling laws, and ensure documentary proof is available for audits. This safeguards against disputes over eligibility for trade benefits.
  
  

3. Licensing and Export Control Violations

Many goods, technologies, and software are controlled under U.S. export laws such as the Export Administration Regulations (EAR) or International Traffic in Arms Regulations (ITAR). Shipping these items without proper licenses is a federal offense.

• Why It Happens: Small exporters or tech startups may not realize their products or data fall under controlled categories. Changes in export destinations, end users, or applications can also affect licensing needs.
  
  

• What’s the Risk: Violations can result in steep fines, blacklisting, or criminal prosecution. Companies may also lose access to international markets or damage government contracting opportunities.
  
  

• How a Lawyer Helps: An international trade attorney performs export classifications, applies for licenses, and sets up internal controls. They also train staff to recognize and flag high-risk transactions.
  
  

4. Failure to Screen Trading Partners

Under U.S. sanctions laws, businesses must ensure they are not dealing with restricted entities, blocked persons, or embargoed countries. This due diligence applies to vendors, customers, logistics providers, and financiers.

• Why It Happens: Many companies don’t have real-time access to updated denied party lists or rely on manual processes that overlook red flags. Others skip due diligence entirely in fast-moving transactions.
  
  

• What’s the Risk: Engaging with a prohibited party can result in frozen assets, blocked shipments, and enforcement actions from agencies like OFAC or BIS. Even unintentional violations are punished.
  
  

• How a Lawyer Helps: Trade lawyers integrate automated screening systems and review business relationships for exposure. They also assist with voluntary self-disclosures if a violation is found.
  
  

5. Incomplete Recordkeeping and Transactional Gaps

Customs and export laws require companies to maintain accurate records for up to five years. These include invoices, entry forms, correspondence, certificates of origin, and broker communications. Gaps in documentation can weaken your defense in an investigation.

• Why It Happens: Teams are often siloed, with sales, logistics, finance, and compliance each holding part of the picture. Manual recordkeeping increases the risk of omissions or inconsistencies.
  
  

• What’s the Risk: Incomplete records not only weaken your legal standing but also signal non-compliance to enforcement agencies. This can lead to audits, delays, and even retroactive penalties.
  
  

• How a Lawyer Helps: They help implement centralized recordkeeping protocols, audit your data trails, and prepare your team for possible inquiries. They also guide responses to document requests from customs officials.
  
  

Warning Signs That You’re Not Fully Compliant

Many businesses operate for years before discovering they’ve been non-compliant all along. Some red flags include:

• Receiving multiple CF-28 (Requests for Information) or CF-29 (Notices of Action) from CBP
  
  

• Filing post-entry corrections more than once a quarter
  
  

• Having inconsistent classification or valuation across entries
  
  

• Lacking internal documentation for country-of-origin or product testing claims
  
  

• Failing to implement a denied party screening protocol
  
  

These signs usually prompt businesses to seek legal counsel. But by then, enforcement actions may already be underway.

Benefits of a Proactive Trade Compliance Review

Instead of reacting to legal issues, businesses that engage legal counsel early often avoid violations altogether. A comprehensive review from an experienced trade lawyer provides:

• Risk Mapping: Identifies weak spots across your compliance program, from vendor onboarding to final shipping documentation.
  
  

• Training and SOP Development: Empowers your team to spot errors before they turn into liabilities.
  
  

• License Forecasting: Plans ahead for changes in product scope or expansion into new markets.
  
  

• Broker Oversight: Ensures that customs brokers are acting in alignment with your legal obligations and internal policies.
  
  

This is especially critical for companies scaling globally, entering sensitive sectors like defense or biotech, or shifting toward e-commerce fulfillment models with complex multi-country logistics.

Conclusion

Ignoring trade compliance doesn’t just result in paperwork issues—it opens the door to costly disruptions, regulatory scrutiny, and even reputational damage. A skilled import export attorney can detect the weak links in your supply chain and regulatory posture before they become problems. Whether it’s recordkeeping, licensing, or classification, legal oversight helps your team move faster while staying compliant in an increasingly scrutinized trade environment.