Client Advisory: CBP Announces Expanded Customs Enforcement Under New Executive Order

WHAT'S THE LATEST

On June 3, 2026, President Trump issued an Executive Order directing U.S. Customs and Border Protection (CBP) to significantly expand customs enforcement across all importers and supply chain participants. The order frames enhanced enforcement as critical to national security, foreign policy, and economic protection, citing longstanding gaps such as undervaluation, importer opacity, duty evasion, and misuse of importer of record (IOR) structures.

The Executive Order is not immediately effective. Implementation will occur through CBP rulemaking and guidance over staged timelines (45 days to 1 year).

WHAT WE KNOW

Key Enforcement Themes (All Importers)

CBP is directed to expand enforcement and vetting of not only IORs, but also to their affiliates, customs brokers, custodians of bonded merchandise, and freight forwarders. Key changes include:

• Importer "good standing" requirement: Importers must demonstrate compliance history and payment of duties. Non-compliant IORs may be restricted from importing or designating brokers.
• Updated IOR registry & risk tiering: CBP will modernize the importer registry, remove inactive entities, and assign risk-based tiers.
• Increased disclosure requirements, including:
  • Sanctions certifications
  • Foreign tax identifiers
  • Business ownership and affiliations
  • Product-level and production data
• Tougher enforcement & penalties, such as:
  • Reduced mitigation flexibility (minimum ~50% penalty floor)
  • No mitigation for repeat offenders
  • Increased broker accountability
• Priority areas of enforcement, including:
  • Forced labor
  • Undervaluation
  • Misclassification
  • Transshipment
  • AD/CVD evasion (EAPA)

TIMELINE OF EXPECTED ACTIONS

Deadlines run from June 3, 2026; operational impact will follow CBP rulemaking.

Deadline: 45 days (by ~July 18, 2026)

Required Action:

• Submit recommendations for legislation to strengthen customs enforcement.

Deadline: 90 days (by ~Sept. 1, 2026)

Required Action:

• Require submission of documentation or information the foreign exporter provided to foreign customs authorities before export to the U.S.
• Revise mitigation standards: minimum penalty floor of at least 50%, a minimum liquidated damages floor, and no mitigation for repeat offenders.
• Expedite and enhance seizure and disposal of non-compliant imports, including easing voluntary abandonment, increasing bond requirements for high-risk shipments, and authorizing third-party disposal.
• Enhance transparency through periodic review/expiration of confidentiality requests and publication of annual enforcement transparency reports.

Deadline: 180 days (by ~Nov. 30, 2026)

Required Action:

• Revise importer eligibility rules: minimum domestic assets and/or bonding, increased bond coverage, IOR designation for formal and informal entries, and additional IOR data disclosures.
• Require all IORs to maintain good standing with CBP.
• Update the IOR registry - remove inactive IORs, confirm compliance/disclosures, and create risk-based tiers.
• Establish enhanced and recurrent vetting for IORs, affiliates, customs brokers, custodians of bonded merchandise, and freight forwarders.

Deadline: 1 year (by ~June 3, 2027)

Required Action:

• Submit a report to the President on the effectiveness of the matters set forth in the order.

FOREIGN VS. U.S. IMPORTERS OF RECORD (IORs)

The order introduces stricter differentiation between U.S. and foreign IORs, applying a substance-over-form test to prevent misuse of nominal U.S. entities.

U.S. IOR

Definition Under the Order:

• An entity organized under U.S. law, located in the United States, and continuously controlled by beneficial owners who are U.S. citizens or lawful permanent residents; OR
• An entity that owns a significant amount of U.S. real property, as determined by the Secretary; OR
• An individual who is a U.S. citizen or lawful permanent resident.

Foreign IOR

Definition Under the Order:

• Any importer that does not meet the U.S. IOR definition.

Minimum Criteria for "Located in the U.S."

Definition Under the Order:

• Principal place of business in the U.S.;
• A physical presence where significant business activity occurs; and
• Sufficient tangible U.S. assets relative to the scale of operations.*

* "Sufficient tangible assets" and "significant business activity" have yet to be defined by CBP or the current administration.

ADDITIONAL REQUIREMENTS FOR FOREIGN IORs:

• No informal entries: Low-value informal entry filings will be prohibited.
• Restricted use of continuous bonds, unless:
  • CBP determines revenue is fully protected and compliance fully assured**, AND
  • Either the IOR or Licensed Customs Broker is CTPAT validated
• Expanded disclosures: Potential requirement to provide ownership and beneficial ownership information, business affiliations, U.S. asset disclosures, and projected import activity.

**There are currently no defined requirements around how CBP or another party will determine whether revenue is fully protected and compliance is assured, but SEKO is actively monitoring.

SEKO'S GUIDANCE

SEKO recommends the following immediate actions:

• Conduct a proactive compliance review
  Focus on valuation, classification accuracy, and documentation controls
• Audit IOR structures and relationships
  Identify foreign IOR exposure and potential compliance gaps
• Prepare for enhanced documentation requirements
  Build processes to capture upstream export and production data
• Assess CTPAT eligibility and benefits
  CTPAT participation may become increasingly critical under the new framework
• Engage early with trade experts
  Coordinate with SEKO and qualified customs counsel ahead of rule changes

SEKO is actively monitoring CBP rulemaking and will provide updates as implementation guidance is issued. If you have questions, please reach out to your SEKO representative, or email us at [email protected].

Trusted compliance expertise

• CTPAT-certified consolidator since 2006
• Licensed U.S. Customs Broker since 2012

How our team can support you

• Import compliance program assessments
• IOR structure reviews
• Classification and valuation audits
• Bonding strategy and risk mitigation
• Coordination with customs counsel