What the Latest ITAR Revisions Mean for Small Businesses – September 2025

By George (Jorge) Cánovas

Vice President – Compliance

FD Associates, Inc.

When most people hear the phrase International Traffic in Arms Regulations or ITAR, they imagine crates of missiles, stealth fighters, or nuclear warheads. They do not picture an underwater robot used by a marine survey company, a high-performance antenna that can be fitted on a commercial airframe, or a piece of body armor sold through a subcontractor. Yet those are precisely the kinds of items the law can capture. Many of you are specifically aware of this and how nuances can matter to include end users and forward manufacturing.

For readers who have never worked with these rules, or work tangentially with the ITAR in a business development or management position, the ITAR is the regulatory framework administered by the U.S. Department of State (DoS) that controls exports of defense articles, services, and related technical data. The backbone of the system is the U.S. Munitions List, a dense catalog of categories ranging from firearms to avionics to chemical precursors. If your work or your businesses work appears on that list, you cannot transfer it abroad or share it with foreign persons inside the United States without approval. And “export” does not just mean shipping. Letting a foreign engineer review controlled design drawings in your office can be treated exactly the same way as sending a crate of parts across a border.

This is not an academic concern. A small business that never thought of itself as part of the defense sector can suddenly find that its products, software, or even research activities fall under ITAR, which can occur when the DoS’s Directorate of Defense Trade Controls (DDTC) modifies the rules. When that happens, the company must apply for licenses through the DDTC, keep meticulous records, and adapt to a new world of restrictions and oversight. Licenses can take weeks or months and may come with conditions that change how and when you deliver to customers. Penalties for violations are severe, running from multimillion-dollar fines to loss of export privileges. It can also go the other way, and relive companies if the items they produce, sell, etc., have been removed.

A Final Rule with Far-Reaching Impact

On August 27, 2025, the State Department published a final rule in the Federal Register amending key sections of ITAR. This rule revises the U.S. Munitions List, updates definitions, and creates a new license exemption. It builds on an interim rule issued in January 2025 and is explicitly framed as part of a broader strategy to streamline defense trade and deepen cooperation with U.S. allies and partners[1]. The timing was no accident. A few months earlier, President Biden signed Executive Order 14268, Reforming Foreign Defense Sales to Improve Speed and Accountability, which directed the Departments of State and Defense to review the U.S. Munitions List to ensure it focuses on the most sensitive technologies while clearing away unnecessary restrictions.

The rule removes several items that the government no longer believes provide a critical military advantage. Certain GNSS anti-spoofing and anti-jam systems, some controlled reception pattern antennas, airborne collision avoidance system antennas, and tungsten- or steel-based lead-free birdshot are all being shifted off the USML. Once removed, they fall under Department of Commerce jurisdiction and the Export Administration Regulations (EAR), meaning they remain regulated for export but in a less restrictive framework.

At the same time, the final rule strengthens control. It makes permanent temporary controls on items “specially designed” for the F-47 Next Generation Air Dominance Platform[2]. It clarifies definitions around advanced military aircraft. It also responds to public comments that highlighted the civil use of large autonomous underwater vehicles. Recognizing the importance of these systems to sectors like energy, telecommunications, and marine research, the rule creates a new license exemption that allows U.S. companies to participate in operations involving certain Underwater Unmanned Vehicles performing functions such as inspecting offshore pipelines, repairing telecom cables, or conducting search and rescue missions, without the full weight of ITAR licensing. This is a striking acknowledgment of the dual-use reality of twenty-first century technology.

DDTC also emphasized that these revisions are not final. The agency continues to welcome input from the public, inviting companies and researchers to identify items they believe should be revised, removed, or added in future updates. This willingness to consult is unusual in the world of arms control and underscores a trend toward more transparent, iterative management of the U.S. Munitions List.

If your company works in aerospace, maritime technology, advanced electronics, protective equipment, chemicals or any sector that develops products with potential dual-use application, we strongly suggest the you read the attached Federal Register Notice . The revision may address technology that your company handles, makes or develops. The revision reshapes what falls under the ITAR and what shifts to Commerce, falling into the EAR. These changes carry real consequences for how you classify your products, pursue contracts, and handle foreign partnerships. Even if you have never considered yourself part of the defense supply chain, these changes could quietly alter your obligations.

Overview of the Changes In-Process

Items removed from the U.S. Munitions List (now under EAR) under the new revisions[3]:

Certain Global Navigation Satellite System (GNSS) anti-spoofing systems
Certain GNSS anti-jam systems
Controlled Reception Pattern Antennas (CRPAs) for Position, Navigation, and Timing (PNT)
Airborne Collision Avoidance System (ACAS) antennas
Tungsten- and steel-based lead-free birdshot projectiles

Items added or clarified under ITAR control[4]:

Items “specially designed” for the F-47 Next Generation Air Dominance Platform (now permanently controlled) USML Category VIII(a)(7) – permanently controls items specially designed for advanced military aircraft, including the F-47.
Foreign advanced military aircraft, explicitly defined to include those with AESA (Active Electronically Scanned Array) fire-control radars, integrated electronic warfare and signature management systems, and beyond-visual-range targeting capability USML Category XI(b) – electronic systems, equipment, or software specially designed for military electronic warfare, countermeasure, and surveillance functions.
Body armor and protective equipment, revised to reflect the current National Institute of Justice performance standards (USML X)
Energetic materials and chemical precursors, including poly-NIMMO and CL-20-related compounds (USML V)
Revised definitions for certain electronic warfare equipment, excluding some civil navigation gear but tightening controls on military countermeasure, see USML Category XI(b)

New ITAR Exemption:

ITAR License Exemption ITAR §123.16(b)(15) (newly created exemption in the Final Rule) is added for Unmanned Underwater Vehicles (UUVs) under 8,000 pounds may be exported temporarily without an ITAR license when used for civil purposes such as scientific research, natural resource exploration, infrastructure inspection or repair (including oil and gas pipelines and telecom cables), and search and rescue operations.

What It Means for Small Businesses

For a small company, the consequences are immediate and tangible. A firm producing antennas or sensors may suddenly find that while many models are now subject to the EAR, certain advanced or military-configured versions remain ITAR-controlled. That reclassification affects the markets the firm can serve, the partnerships it can form with larger primes, and the way investors assess its risk profile.

Consider also the opportunities. A marine robotics startup might benefit from the new UUV exemption. Instead of months of waiting on a license, it could send a vehicle overseas for a civil infrastructure project with far fewer delays provided the company is registered with DDTC. That advantage is real, but only if the company can prove it qualifies, document the mission, and keep meticulous control of the platform.

A chemical supplier may need to revisit formulations now listed by name in the U.S. Munitions List or a software developer whose algorithms strengthen satellite navigation against spoofing may find itself removed from the ITAR and now under the EAR jurisdiction, which is less restrictive for some destinations but carries its own set of risks.

The common thread is that export classification is critical to all exporters. ITAR is not just associated with missiles, tanks and stealthy aircraft, it touches electronics, materials science, robotics, and software.

For small businesses, the difference between opportunity and liability often lies in whether leadership is paying attention to how their company products, software, technology and services are controlled and the reason that executives must clearly understand the liabilities, as well as business strategic opportunities. If your business can navigate these opportunities correctly and with foresight, you will be the company with the competitive edge, which equates to profits.

Foreign Businesses Should Take Notice

These ITAR US Munitions List revisions should also matter deeply for foreign companies. ITAR follows the item, not just the U.S. manufacturer. A distributor in Europe handling American-made products cannot re-export them freely without reexport authorization. A shipyard in Asia servicing vessels with U.S. navigation equipment must comply with U.S. licensing rules. Even a foreign research consortium that touches U.S. technical data can be pulled into the ITAR regime. Foreign companies need to be knowledgeable on specific changes to the ITAR and the EAR if they do business in the defense sector.

What may not be obvious is that compliance can be a competitive advantage. Executive Order 14268 is explicit about its intent: to streamline defense trade, facilitate cooperation with allies, and reduce unnecessary burdens. For a foreign company seeking to enter the U.S. defense supply chain, demonstrating a mature understanding of ITAR and the EAR is not a box-checking exercise it is a selling point. American primes and government customers increasingly want foreign partners who can handle controlled technology without fear of violations. Firms that invest in compliance now are better placed to win contracts, attract U.S. partners, and be viewed as credible contributors to joint defense projects.

The executive order behind this rule makes the logic plain, that is; by focusing the U.S. Munitions List on the most sensitive technologies and easing controls elsewhere, the U.S. government is trying to speed up defense trade with trusted allies. Foreign businesses that align early, adopt compliance systems, and train their staff are positioning themselves not only to stay safe but also to grow faster in a global marketplace that prizes reliability and accountability.

A Note on Research Institutions

Although this article focuses on businesses, academic research institutions are not immune to the ITAR and the evolution of changes in the regulations. University labs often work with technologies that straddle the civil–military divide. An engineering department experimenting with advanced antennas, a marine science institute operating an underwater vehicle, or a chemistry lab developing new energetic materials can all find themselves pulled into ITAR. The presence of foreign students adds further complexity, since allowing access to controlled data counts as an export under the law. U.S. institutions operating off U.S. soil can find themselves in even a more complex situation. What is clear is that institutions that fail to update their technology control plans, and their internal compliance programs risk both regulatory exposure, reputational harm and the loss of valuable grant opportunities.

Final Thoughts

The September 2025 rule is not simply a regulatory housekeeping exercise. It is part of a deliberate strategy to make the U.S. export control system more precise, more responsive, and more supportive of international cooperation. For small businesses, it is a reminder that compliance is inseparable from competitiveness. For foreign firms, it is a signal that mastering ITAR and the EAR is a way to distinguish themselves as reliable partners in the U.S. defense market. And for research institutions, it is another push to integrate export awareness into daily life.

In the end, these revisions tell a story of adaptation, as it is clear that the U.S. government wants to protect the warfighter’s edge without smothering innovation. Businesses that fully embrace and comply, whether in Virginia or Paris, will not only stay on the right side of the law but will also gain an advantage in a world where compliance is itself a mark of credibility.

Please contact FD Associates if you have any questions or our team of experts can help to position your enterprise to have a clear competitive edge and ensure profits, not liabilities end up on your P&L statement.