Customs Crackdown: Preparing for Heightened Enforcement

On June 3, 2026, President Trump issued Executive Order 14411, Strengthening Customs Enforcement (the Order). The Order is intended to combat customs duty evasion, improve compliance with US customs and trade laws, and increase accountability among parties responsible for importing merchandise into the United States.

To achieve these goals, the Order, accompanied by its Fact Sheet, directs the US Department of Homeland Security (DHS) and the US Customs and Border Protection (CBP) to strengthen importer requirements, impose heightened standards on foreign importers of record, and expand customs enforcement measures, notably sharpening the distinction between US and foreign importers of record (IORs).

This Order, combined with increased enforcement efforts by CBP and the US Department of Justice, emphasizes that importers should buttress compliance capabilities, strengthen internal monitoring, and prepare for increased scrutiny of import transactions.

KEY COMPLIANCE STEPS

• Evaluate IOR Structure. The Order establishes a pronounced distinction between US and foreign IORs and directs enhanced eligibility, bonding, and compliance requirements on foreign IORs, including prohibiting foreign IORs from filing informal entries and from using continuous bonding.
• Assess Heightened Disclosure and Bonding Obligations. Importers should begin compiling information related to ownership, beneficial ownership, affiliation, and domestic assets, as well as current and anticipated bonding positions, in light of new legal obligations.
• Review Compliance Record. The Order directs DHS and CBP to revise importer eligibility regulations, including enhanced reporting, disclosure, and IOR “good-standing” requirements. Compliance history of an IOR and its affiliates contributes to “good standing,” so corporate families should conduct holistic internal reviews to resolve any outstanding issues and maintain compliance across the enterprise.
• Coordinate with Customs Brokers. Brokers will face heightened diligence obligations and may need additional information and certifications from importers. Coordination among parties leads to a smoother transition and prevents a scramble.
• Prepare for Increased Enforcement. The Order calls for increased customs enforcement and reform, following prior significant import enforcement measures targeting tariff evasion and customs fraud, including the creation of the cross-agency Trade Fraud Task Force.
• Monitor Further Rulemaking. The Order sets aggressive deadlines—45 days for a legislative proposal and 180 days for most regulatory changes—though it leaves most operational details to the agencies. Important details and definitions will follow, as will opportunities for notice and comment.

A POLICY SHIFT: THE PRIVILEGE OF IMPORTING

CBP Commissioner Rodney Scott characterized the philosophy of the Order as, “Importing into the U.S. has for too long been treated as a right, not a privilege.” Customs enforcement and eliminating tariff evasion are consistent themes across administrations, but the Order goes beyond directing CBP to increase audits or levy higher penalties.

It adjusts the underlying structure of who qualifies as an importer, what information they must disclose, how they are vetted, and the consequences of noncompliance. This is a policy shift from reactive enforcement to structural enhancement, making it more difficult to evade customs laws in the first instance.

The Order highlights several systemic issues that undermine customs enforcement:

• Undervaluation of imported merchandise;
• Use of foreign or shell company importers that lack a meaningful US presence;
• Transshipment schemes designed to evade applicable duties; and
• Entry of goods produced with forced labor.

The Order seeks to alter the structures that have allowed these concerns to persist, rather than focus on after-the-fact enforcement.

ORDER DIRECTIVES

Foreign IORs to Face Tougher Environment

Foreign IORs receive some of the most consequential changes of the Order, including prohibition from filing informal entries (generally importations valued at less than $2,500), prohibition from using a continuous import bond, and a requirement that they be validated by the Customs Trade Partnership Against Terrorism (CTPAT) or otherwise use a CTPAT-validated customs broker. DHS must implement such obligations within 180 days of the Order.

An IOR is the party legally responsible for imported merchandise entering the United States. The IOR may be the owner or purchaser of the goods or, when designated by the owner, purchaser, or consignee, a licensed customs broker. The IOR is responsible for meeting all customs requirements associated with the importation of merchandise, including the filing of entry documentation, payment of duties, taxes, and fees, and compliance with applicable customs laws and regulations.

Historically, CBP regulations permitted nonresident corporations to act as IORs, provided they appointed a US resident agent who is authorized to accept service of process and maintained a customs bond backed by a resident corporate surety. Citing concerns regarding tariff evasion, noncompliance, and national security, the Order directs DHS and CBP to revise importer eligibility regulations and establish a formal distinction between US and foreign IORs.

The Order draws a strict distinction between US and foreign IORs based on citizenship, legal organization, ownership, location, and US assets, narrowly defining US IOR. Individuals must be US citizens or lawful permanent residents. Entities must be organized under US law, located in the US, and at all times have controlling beneficial owners who are US citizens or lawful permanent residents.

Alternatively, an entity may be considered a US IOR if it owns a significant amount of US real property, as determined by the DHS secretary. A foreign IOR is any IOR that does not meet the requirements of a US IOR.

The Order also strengthens the criteria for evaluating whether an entity is “located in the United States.” In making this determination, the Order directs CBP to consider:

• Whether the entity maintains its principal place of business and a physical presence where significant business activity is conducted in the United States;
• Whether the entity possesses sufficient tangible US assets relative to the size and scale of its operations; and
• Whether the entity functions primarily as an instrumentality of a foreign manufacturer lacking a substantial US presence.

The Order prohibits foreign IORs from filing informal entries and directs that foreign IORs may file formal entries only if they satisfy enhanced compliance requirements, including sufficient bonding and either participation in CBP’s CTPAT program or the use of a CTPAT-validated broker. Foreign IORs must also provide single-entry bonds for all imports and can no longer rely on continuous bonds, which is a cost-effective annual bonding strategy for frequent importers.

Companies that rely on Incoterms or contractual provisions that obligate a foreign seller to handle US importation should work closely with their counterparties to ensure that all are prepared for these new requirements.

Heightened Obligations for All IORs

The Order strengthens accountability, reporting, and financial responsibility requirements applicable to all IORs, both US and foreign. Specifically, the Order directs the agencies to require IORs to maintain minimum levels of tangible domestic assets, bonding, or both, increase minimum bond coverage requirements, and require IORs to provide certain data and identification information to CBP.

Required disclosures from IORs include anticipated import volumes, year organized, ownership and beneficial ownership information, business affiliations, domestic asset information, and any additional information that CBP determines is necessary.

As part of its enhanced enforcement measures, the Order directs DHS and CBP to implement a good-standing requirement, which is evaluated based on the compliance history of an IOR and its affiliates. IORs that fail to maintain good standing may be prohibited from importing merchandise into the United States or engaging in related import activities (including importation through a customs broker).

This means that a compliance misstep in one organization could affect the import privileges of other importers in the corporate family, emphasizing the need for holistic compliance assessments.

Expanded Disclosure and Certification

Noting the need to close loopholes and the insufficient enforcement of existing customs laws, the Order directs enhanced enforcement to the maximum extent permitted by law. This begins with requiring heightened import disclosure and certification, including by requiring that CBP-regulated parties certify compliance with the Countering America’s Adversaries Through Sanctions Act and other laws as determined by CBP.

The new rules would require parties to disclose foreign tax and global business identifiers and detailed information about supply chain and production methods, as well as to submit to CBP any documentation that the foreign exporter submitted to a foreign customs administration.

Higher Penalties, Tighter Mitigation, and Faster Disposal

The Order further authorizes any action deemed necessary to bolster customs enforcement, including enforcing liquidated damages claims, restricting in-bond utilization, increasing audits, and imposing maximum penalties on importers and brokers. Assessments, audits, and enforcement activities have been increasing over the last 18 months. CBP conducted 465 audits in FY2025, recovering $235.46 million as a result of importer audits—nearly doubling FY2024 collections for the same activities.

The Order further directs modification of all CBP mitigation guidelines to establish a minimum penalty floor of 50% of the assessed penalty, with opportunity for mitigation eliminated for repeat offenders. It is unclear how this directive will affect existing regulations concerning prior disclosures and statutory mitigation schemes following a valid disclosure.

The Order directs CBP to accelerate abandonment, seizure, and disposal of noncompliant goods, authorizing third-party disposal where appropriate. Bond requirements for high-risk shipments will increase, and the agency must publish annual enforcement transparency reports. Existing confidentiality protections on enforcement data will be subject to periodic review and expiration.

WHAT IMPORTERS NEED TO KNOW

While these reforms do not take immediate effect and key details are still unknown, importers can prepare now by evaluating:

• Corporate structure and compliance posture;
• IOR status under the new definition;
• Bonding levels across CBP programs (importer, foreign trade zone, bonded warehouse, in-bond movement, etc.);
• Disclosure readiness and current recordkeeping;
• Contractual obligations for importation; and
• Supply chain visibility.

Importers, brokers, and other interested parties are expected to have an opportunity to review and comment on forthcoming details as additional rulemaking follows. Because the resulting definitions and standards of this rulemaking may govern obligations and enforcement for years, affected parties should consider engaging either directly or through trade associations.

Legal practice assistant Anna Pope contributed to this LawFlash.