With Trump’s “Liberation Day” tariffs on pause, we can now think about what we should do when this latest delay ends. While it's not exactly clear what the President is trying to do with tariffs, regardless of what the goal is, there is still the question of whether tariffs are an effective means of accomplishing it. The truth is that tariffs are a lousy and counterproductive deal for Americans, producers and consumers alike. Fortunately, there is a much better approach that benefits everyone: make it easier for Americans to export to other countries by streamlining approval processes and cutting regulations.
Indeed, President Trump acknowledged the onerous approval process in the United States during his Joint Address to Congress, saying, “Approvals that should take 10 days to get instead take 10 years, 15 years, and even 20 years before you’re rejected.” And while it is true that in the context of his remarks, he was referring to approvals to do business domestically, the statement rings just as true for trade regulations that prevent our firms from doing business internationally.
For example, the University of Oregon notes that to export “tangible items, data or software” a person needs a license. This license could take 30 to 90 days from the day the application is submitted. If that license is obtained, however, Americans face additional compliance costs. This is especially true for items considered to be “dual-use” in that they have both civilian and military applications. If this is the case, then the item may require a separate “Letter of Assurance” from the importing country that the good will not be transferred or re-exported beyond the originally licensed importer. These “dual-use” items are more than just weapons; encryption software and communication devices are obvious items that would be on this list. But so too are certain parts of microwave ovens and medical imaging technologies, such as those found in CT scans and MRI machines, because of the high resolution cameras and sensors that can also be used for military surveillance.
In all, the Bureau of Industry and Security’s Commerce Control List (CCL) consists of ten broad categories which are each subdivided into five product groups that regulate how Americans can go about selling goods abroad.
Failure to comply with these rules results in fines as well as jail time. Specific compliance expenditures include hiring staff, purchasing compliance software, conducting costly risk assessments, and paying duties, tariffs, legal fees, service fees, and a myriad of other expenses. All told, these expenditures are estimated to cost the average business $297,000 per year, but they can also exceed $400,000. This might not be much to large corporations with revenues in the tens of millions of dollars annually, but it is crippling for small businesses, precluding them from even breaking into this business.
QuantGov’s documentation of regulations by agency and policy area help provide some insight into the rules that cover regulations related to international trade. From their insights, eight separate agencies can claim jurisdiction over certain aspects of international trade. Collectively, these agencies issued over 21,000 explicit restrictions regarding international trade that must be complied with. As of 2022, the three agencies that have the largest number of restrictions related to trade were Customs and Border Protection (CBP), The Office of Foreign Assets Control, and the Bureau of Industry and Security.
As should be clear, a world of zero restrictions on exports of sensitive goods, services, and technologies would likely be unwise from a national security standpoint. Some restrictions cover genuine national security concerns and may be worth keeping on the books. Much like the broader federal government, however, this area seems overwhelmed with unnecessary red tape begging for reduction.
Just last week, Treasury Secretary Scott Bessent, commenting on the state of federal regulations, said, “We’ve got a Blockbuster-style government in a Netflix world. We’re hailing cabs in an Uber economy. Why can’t the government be in the gig economy? Not hard.”
The same can be said for export regulations.
President Trump is applying what he knew in the private sector to his life in the White House: The less time, talent, and resources a business has to devote to onerous compliance costs, the more time, talent, and resources can be devoted to growing a business and ensuring its success.
Making it easier for American businesses to sell their goods abroad will help Trump accomplish a myriad of his goals and will do so without the additional compliance costs that come with tariffs. They also clearly advance the President’s mission of regulatory reform. That’s a deal that everyone can appreciate.
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