US bolsters customs enforcement of small and foreign importers

US President Donald Trump has signed an executive order strengthening customs enforcement to enhance the scrutiny of importers, particularly smaller businesses and those based abroad.

The executive order, signed June 3, will raise bonding requirements for importers of record (IORs) and require them to show they aren’t shell companies by disclosing domestic assets. The order also places increased scrutiny on “foreign” IORs, including not allowing them to make informal customs entries, which are typically used for low-value shipments.

The order targets small, infrequent importers that are largely unknown to US Customs and Border Protection (CBP), as well as importers using diversions from one country to another to reduce their duty exposure.

Importers will also be required to share volume forecasts with CBP, although the frequency hasn’t been disclosed.

“Customs reform is long overdue. Systemic inefficiencies, loopholes, insufficient enforcement mechanisms, and outdated processes have created opportunities for malign actors to evade federal law,” Trump’s order read. “Examples of noncompliance include undervaluing imports, withholding critical information about IORs and the goods being imported, and avoiding payment of duties through various arrangements and schemes.”

The executive order requires US importers to show they have a physical US presence, generate business activity, and hold domestic assets. Importers will also be required to provide more detailed information, including proof of beneficial ownership and more exact product specification, and provide to the CBP within 90 days the identical paperwork given to customs agencies at the country of origin.

The order also calls for Customs to not allow relief from penalties over 50% of the assessed value and limit repeat offenders’ ability to challenge penalties.

Customs and the Department of Homeland Security are mandated within 180 days to create enhanced methods to fight the evasion of duty paying and other customs noncompliance.

The immediate online response to Trump’s executive order from the customs community has been mixed. On one hand, the order could answer a question that has long dogged customs brokers: Who truly owns the cargo and is thus legally responsible? Others fear that, besides creating more administrative work, the order will give license to customs agents to be heavy-handed.

Higher scrutiny, more holds

The executive order, which the White House says won’t take effect immediately, comes as customs brokers and shippers, at least anecdotally, report an increase since the start of this year in customs holds placed on their inbound containers. Shipments from Vietnam, where goods made in China can be misclassified to avoid higher tariffs, receive extra scrutiny, and sourcing shifts to Southeast Asia create unfamiliar origins on customs declarations, raising the interest of agents, various sources tell the Journal of Commerce.

There’s been a recent increase in customs holds for containers from China at the ports of Los Angeles and Long Beach, said Alexander Owens, an attorney and partner at Pietrangelo Gordon Alfano Bosick. CBP doesn’t disclose data on how many times it stops a container for inspection, something that delays shipments and opens cargo owners and consignees to additional storage fees.

But there’s no doubt Customs enforcement has ramped up. The Department of Justice through the first five months of the year has received more than $570.6 million in judgements and settlements tied to government contracting fraud, according to Owens, who represents whistleblowers who make claims under the False Claims Act, legislation that allows the federal government to pursue fraud committed against federal programs.

“The rise in customs holds is likely the result of a confluence of several factors: a protectionist administration, the end of the de minimis exemption, and CBP’s increasing use of AI to screen shipments for anomalies,” Owens said. “Frankly, given how hawkish this administration is on trade, it would be unusual if holds didn’t rise.”

Higher tariffs in Trump’s second term have spurred some shippers to turn to a delivered duty paid (DDP) structure where the seller assumes all risks and costs but sometimes undervalues the tariffs that were owed, said Steven Heid, president of SJ Stile Associates, a customs broker and forwarder. As a result, Customs are taking a harder look at overseas shippers, foreign entities and those using questionable structures in duty payment, he said.

“From an industry perspective, many customs brokers, freight forwarders, sureties, and compliance professionals began noticing increased scrutiny as tariffs became a larger component of landed costs,” Heid said. “There is also a growing belief within the trade community that CBP’s increased use of advanced data analytics and artificial intelligence allows the agency to more effectively identify unusual trade patterns, importers-of-record changes, valuation anomalies, country of origin concerns and significant shipping arrangements over time.”

This article was originally published by the Journal of Commerce on June 4, 2026.