Cross-border trade fears spur AI push, delay expansion

Avalara's latest research points to rising complexity in cross-border trade and slowing momentum in international expansion, as many firms cite regulatory uncertainty as a reason to delay market entry.

The 2026 Cross-Border Chaos Report found that 83% of business leaders believe cross-border operations have become more complex over the past year. Another 70% said trade is more complex than it was three years ago, as tariffs, fragmented regulations and geopolitical volatility reshape operating conditions.

Regulatory uncertainty is also reshaping go-to-market plans. The survey found that 39% of companies have delayed entering new markets because rules and compliance expectations are unclear. It also found that only 43% of businesses are actively pursuing new international opportunities.

The findings suggest a shift in how companies assess global growth. While cross-border expansion has often focused on demand, logistics and distribution, compliance and policy stability now appear more central to board-level decision-making.

Risk factors

Respondents identified regulatory change after entering a market as a key risk. Nearly half (49%) said post-entry regulatory change was the most influential risk for cross-border operations. Other concerns included border disruption (46%) and unexpected fines (38%).

The report describes these pressures as both operational and financial, noting that unpredictable conditions can increase costs and cause delays-especially when businesses must navigate multiple rule sets across jurisdictions and frequent shifts in trade policy.

The survey also suggests companies are responding by increasing their use of technology. It found that 87% now use AI in some capacity in cross-border operations, as automation becomes more embedded in compliance processes and risk controls.

Technology adoption

Beyond headline usage, the report breaks down adoption levels: 27% of respondents said they are deploying AI broadly in cross-border operations, while 19% said AI has become central to their risk management approach.

These patterns suggest firms are increasingly using software and automated processes for compliance, documentation and monitoring regulatory changes. They also point to a stronger link between operational resilience and investment in systems that can manage complex cross-border requirements.

Craig Reed, GM of Cross-Border at Avalara, said the pace of change is forcing businesses to adjust.

"Global expansion hasn't lost its appeal, but the rules of the game are changing faster than ever," Reed said.

"As trade becomes more fragmented and unpredictable, businesses are realising they can't wait for certainty to return. They're using technology and automation to stay compliant, manage risk, and keep moving forward," he added.

Regional pressures

The report also highlights differences in how uncertainty is felt across major markets, even as the broader trend remains consistent. In the US, concerns about sudden policy shifts are linked to higher levels of AI adoption in cross-border operations.

In the UK, post-Brexit divergence and friction with Europe continue to shape trade strategies. Australia and India are described as markets where regulatory fragmentation and shifting trade alliances complicate market entry decisions.

The research was based on a survey of 1,500 senior business decision-makers at businesses and retailers that trade or sell goods cross-border in the US, UK, India and Australia. It focused on perceptions of complexity, risk and the operational approaches companies are adopting in response.

Avalara presents the results as evidence that compliance has moved from a back-office consideration to a core determinant of expansion plans, particularly as rules change quickly and inconsistently across borders.

Reed said businesses are adapting their operations as they weigh cross-border opportunities against higher uncertainty and disruption risk.