On June 3, President Trump issued an Executive Order, “Strengthening Customs Enforcement,” signaling a broad tightening of U.S. Customs enforcement that will impact all importers and parties involved in import transactions.
The Order emphasizes increased importer accountability, enhanced vetting, expanded disclosure requirements, and stronger enforcement, particularly affecting importers of record (IORs), with heightened implications for foreign IORs.
Although the changes are not immediate, the Department of Homeland Security (DHS) and U.S. Customs and Border Protection (CBP) are expected to implement them through the rulemaking process, including the issuance of future Federal Register notices seeking public comment.
Key Takeaways
- Heightened enforcement expected across CBP operations
- Increased bonding and proof of tangible domestic assets in the U.S. for IORs
- Expanded data reporting and supply chain disclosure obligations
- Stricter rules and limitations on foreign IORs
- Higher penalties and reduced mitigation flexibility
Importer of Record (IOR) Requirements
Within 180 days, CBP will revise IOR requirements to include:
- Minimum U.S. assets and/or increased bonding thresholds
- Expanded disclosures (ownership, affiliations, assets, and import volumes)
- A new “good standing” requirement; noncompliant IORs may be barred from importing
Foreign IOR Restrictions
- Foreign IORs will be prohibited from filing informal entries
- Formal entries will be permitted only if additional requirements are met, including:
- Sufficient bonding is provided to protect revenue
- Compliance standards are met
- Participation in CTPAT (if eligible), or use of a CTPAT-validated broker
- The Order also introduces a substance-over-form test to prevent the use of shell companies or artificial structures to qualify as a U.S. IOR
Enhanced Vetting and Oversight
CBP will expand oversight of the importing community by:
- Updating the IOR registry (removing inactive IORs and verifying compliance)
- Creating risk-based tiers based on compliance history
- Expand vetting to IORs, their affiliates, brokers, forwarders, and bonded operators
New Reporting Requirements
The Order directs CBP to implement expanded import reporting requirements, including:
- Certifying compliance with critical supply chain requirements like the Countering America’s Adversaries through Sanctions Act Compliance certifications
- Foreign tax and business identifiers
- Detailed supply chain and product information
- Within 90 days, importers may also be required to submit export-related documentation filed with foreign governments
Increased Enforcement and Penalties
CBP is directed to expand enforcement activities, including:
- Increased audits and investigations
- More aggressive bond enforcement and liquidated damages claims and penalties
- Restrictions on in-bond shipments
Priority Enforcement Areas: forced labor, undervaluation, misclassification, transshipment, and AD/CVD evasion (EAPA).
Penalty Changes
Within 90 days, CBP will revise mitigation policies to include:
- A minimum penalty floor of at least 50% of assessed penalties
- Minimum liquidated damages thresholds
- No mitigation for repeat offenders
Implementation Timeline for CBP
- 45 days: Legislative recommendations for additional Customs enforcement legislation
- 90 days: New reporting, penalty, and enforcement measures
- Within 180 days: New IOR rules, registry updates, and vetting requirements
- Within 1 year: Implementation Report to the President
This Executive Order effectively lays the groundwork for a comprehensive modernization of U.S. Customs enforcement.
Importers, particularly those using foreign IOR structures, should anticipate increased scrutiny, higher compliance costs, and more extensive reporting obligations. Begin evaluating current import practices in advance of forthcoming rulemaking.
We will continue to monitor developments and provide updates. For questions, please contact your Deringer representative or Customs Attorney.
