 New Executive Order on ?trengthening Customs Enforcement?What Importers Need to Know |
Source |
American Shipper |
Post Date |
08/04/2026 |
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On June 3, 2026, President Trump signed an Executive Order titled ?trengthening Customs Enforcement,?(the Order) directing the Department of Homeland Security (DHS) and U.S. Customs and Border Protection (CBP) to undertake a broad overhaul of the rules governing importation into the United States. The Order represents one of the most comprehensive directives on customs enforcement in recent memory, imposing significant new requirements on importers of record (IORs), sharply restricting the ability of ?oreign entities?to serve as IORs, establishing a minimum penalty floor for customs violations, and calling for enhanced seizure and disposal authorities for noncompliant goods.
While the Order sets aggressive deadlines ?primarily 180 days for most regulatory changes and 45 days for a legislative proposal. However, the Order leaves the operational details to future rulemaking by DHS and CBP, because the regulatory changes would need to undergo standard notice-and-comment rulemaking, or otherwise be established by Congress. Nevertheless, this Order may signal the Trump Administration? intention to further prioritize customs enforcement as a key tenant of its trade policy. Importers should evaluating their compliance posture now in anticipation of the key changes outlined below.
Key Takeaways: June 3 Executive Order
1. Review IOR Structures for Foreign IORs. Companies that use foreign entities as the IOR should evaluate whether their current import structures will remain viable under the new restrictions.
2. Assess Bond and Asset Exposure. Evaluate current bonding levels and domestic asset positions in light of anticipated increases in minimum bond requirements. Companies that rely on minimum continuous bonds should be prepared for significant increases.
3. Prepare for Enhanced Disclosure Obligations. Begin compiling ownership, beneficial ownership, business affiliation, and domestic asset information that will likely be required under the new regulations.
4. Evaluate Compliance History. The new ?ood standing?requirement, which is tied to compliance history and payment records of the IOR and its affiliates, means that a compliance failure by one affiliate could jeopardize import privileges across a corporate family. Companies should conduct internal audits to identify and remediate any outstanding compliance issues.
5. Engage with Customs Brokers. Customs brokers will face heightened due diligence obligations. Importers should coordinate with their brokers to understand what additional information and certifications may be required.
6. Monitor CBP Rulemaking Closely. The most consequential details, including the definition of ?ood standing,?the specific minimum bond levels, and the scope of new disclosure requirements, will be determined through future rulemaking. Importers should be prepared to submit comments during the notice-and-comment period.
Foreign IORs Will Face a More Challenging Import Environment
Many of the Order? most consequential changes impact foreign IORs. Within 180 days, DHS is required to prohibit foreign IORs from filing informal entries under 19 U.S.C. ?1498, meaning that only U.S. IORs will be authorized to file informal entries. (Informal entries generally are commercial or personal importations valued at less than $2,500, although this threshold is $500 for items subject to special duties, such as Section 301 duties.)
For formal entries, the Order further prohibits foreign IORs from using a continuous bond to meet the requirements for entry. It also requires that foreign IORs be validated by Customs Trade Partnership Against Terrorism (CTPAT), if eligible, or otherwise use a CTPAT validated and licensed customs broker to file entries. The White House Fact Sheet acterized these restrictions as bringing ?.S. customs policy and practice in line with many [U.S.] trading partners?that already ?rohibit foreign entities or persons from serving as the IOR or generally require that foreign importers partner with verified domestic parties.?Foreign IORs may have few choices in complying with these new requirements, given that the Order includes a strict definition for U.S. IORs that, in addition to physical location and incorporation in the United States, also looks to controlling beneficial ownership. Specifically, the Order requires that a U.S. IOR ?as at all times controlling beneficial owner(s) who are United States citizens or lawful permanent residents; or, in the case of an entity, owns a significant amount of real property in the United States.? The Order notes that, with respect to determining whether an IOR is ?.S.?or ?oreign,?CBP is required to issue guidance that prioritizes preventing entities from using ?hell companies, sham transactions, or artificial corporate or organizational structuring in an attempt to qualify as a?U.S. IOR.2
The Order also requires foreign IORs to submit to CBP any information provided to foreign customs authorities prior to the goods?arrival in the United States. CBP must ?ake steps to establish this requirement?within 90 days after the date of the Order, i.e., September 1, 2026.
All IORs Are Slated To Be Subject to Stringent Bond, Documentation, and Vetting Requirements
The Order requires that all IORs, both foreign and U.S., maintain a bond or a minimum level of tangible domestic assets, or both, for both formal and informal entries. In addition, the Order directs CBP to increase the minimum required bond coverage for IORs. This policy change is designed to ensure that importers are financially accoun for their customs liabilities and that CBP can collect penalties and duties owed.
Moreover, all IORs must provide to CBP additional data and identification information, such as ?nticipated import volumes, year organized, ownership and beneficial ownership disclosures, business affiliation disclosures, and domestic asset disclosures, and any other data that CBP deems necessary.? It is as yet unclear how these new documentation requirements will interact with the Order? enhanced vetting procedures, including ongoing vetting, which will be required for all ?ndividuals and entities seeking to conduct activities directly related to the importation of goods.? Impacted persons include, but may not be limited to, foreign IORs, affiliates of IORs, customs brokers, custodians of bonded merchandise, and freight forwarders.
In addition to the new documentation requirements and vetting procedures, all IORs must maintain good standingwith CBP or else forfeit their import eligibility. The Order gives CBP discretion to develop the criteria but does list certain elements that must be included, such as ?he IOR? and its affiliates?history of compliance with U.S. customs and trade laws and regulations and payment of required customs liabilities, among other relevant considerations. Notably, an IOR found to have illegally imported fentanyl or other contraband will not be considered in good standing, and an IOR that is not in good standing ?hall not be allowed to import into the United States or otherwise conduct activities directly related to the importation of goods, including designating a customs broker to act as IOR on their behalf.
Enforcement Ahead?
The Order directs DHS and the Department of Justice to further prioritize customs enforcement and identifies areas of particular focus, including products made using forced labor, illegal transshipment of products, and misclassification and undervaluation of imports. The Order also instructs DHS and CBP to establish various disclosure and certification requirements, designed to combat duty evasion and noncompliance with supply chain rules. Notably, among all the changes, the Order mandates criminal and civil penalties for noncompliance with these ?eightened requirements.?While the specific contours of these requirements will be developed through future rulemaking, the Order signals the Administration? intent to require importers to affirmatively certify compliance with U.S. customs and trade laws at multiple points in the importation process, leading to potential heightened legal exposure.
To support these priorities, the Order enhances the Secretary of Homeland Security? enforcement capabilities by directing the Secretary to:
? Enforce liquidated damages claims against noncompliant bonds, restrict in-bond utilization, increase audits, restrict duty payment deferrals, and take any other action deemed necessary to bolster customs law enforcement.
? Enhance authorities for the seizure and disposal of noncompliant imports, including by reducing regulatory burdens associated with voluntary abandonment of goods, and authorizing third-party disposal of seized or abandoned merchandise.
? Require the Secretary to impose maximum penalties on customs brokers who fail to conduct due diligence, who repeatedly represent noncompliant clients, and who fail to cooperate in a timely manner with requests for information.
? Establish a 50% minimum penalty floor, which limits CBP? discretion to reduce the assessed penalties on importers who violate U.S. customs laws. This represents a meaningful shift in penalty practice and will significantly affect importers?calculus in penalty mitigation proceedings and prior disclosure processes.
Although the Order established various timelines for implementation, CBP will require significant resources to effectuate these measures. In particular, the documentation and vetting requirements will significant administrative responsibilities for CBP, at the same time that the Administration is expecting the agency to carry out increased enforcement. The Order does rely on a number of statutory authorities, many of which include broad grants of authority to the President. However, how the Order is implemented both procedurally and substantively may determine whether the regulatory and policy changes withstand potential legal challenges.
Customs compliance and enforcement are clearly dynamic areas that affect every entity importing products into the United States. WilmerHale is well-positioned to advise on these developments and how they may impact importing activities.
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