The Six Customs Enforcement Questions Every Importer Should Be Asking

On June 3, 2026, President Donald Trump signed Executive Order 14411, “Strengthening Customs Enforcement” (EO), directing the most significant overhaul of U.S. Customs and Border Protection (CBP) import requirements in more than a decade (see CBP’s Strengthening Customs Enforcement resource page and BDO’s trade alert, Executive Order “Strengthening Customs Enforcement” Signals Sweeping U.S. Import Reform (June 5, 2026) for additional background).

EO 14411 could produce disruptive regulatory and enforcement changes for all importers, materially affecting importer eligibility, customs valuation, disclosure obligations, and enforcement exposure. The immediate priority is readiness. Companies should now assess whether their importer of record (IOR) structures could satisfy the EO’s anticipated U.S.-substance requirements, identify historical compliance issues that could affect good-standing determinations, and confirm that they can promptly produce the data and records supporting their customs declarations. Although implementing regulations remain forthcoming, these steps can help companies model operational and financial exposure before the new requirements take effect.

The six questions below address the issues BDO clients have raised most frequently since EO 14411 was issued and identify practical steps companies can take while CBP develops implementing regulations.

1. What will the substance requirements be for a U.S. importer after the EO is implemented?

Currently, the only available information about the substance requirements for an IOR after implementation of the EO is found in the definitions of “U.S. IOR” and “foreign IOR” in Section 2. The EO defines a U.S. IOR as an entity that:

• Is organized under U.S. law;
• Is located in the U.S.; and
• Either has controlling beneficial owner(s) who are U.S. citizens or lawful permanent residents, or owns a significant amount of real property in the U.S.

An entity failing to fulfill any of the three conditions is defined as a foreign IOR under the EO. Notably, to be “located in the U.S.” under the EO definition, an entity must have:

• Its principal place of business in the U.S.;
• A physical presence where significant business activity is conducted in the U.S.; and
• Sufficient U.S. tangible assets, considering company size or scale and whether the entity functions as an instrumentality of a foreign manufacturer.

The EO does not further define the elements of “located in the U.S.” We expect CBP to address the new importer definitions through rulemaking to be published in the Federal Register in advance of updates to CBP regulations, which may clarify the key terms that remain undefined.

Until additional guidance is released, affected companies should consider the policy statements in the EO related to the new importer definitions when planning for potential supply chain and transactional impacts. In relation to the new importer definitions, the EO expresses an intent to:

• Prevent “entities from using shell companies, sham transactions, or artificial corporate or organizational structuring” to qualify as a U.S. IOR;
• “Impose heightened requirements against foreign IORs, which can more easily evade payment of amounts owed and other consequences for noncompliance with U.S. customs and trade laws,” particularly when “assets, operations, and key individuals are located overseas”; and
• Prevent informal entries by foreign IORs because they “are less familiar with U.S. customs and trade laws.”

Based on these policy statements in the EO, BDO anticipates that CBP may implement the new importer definitions in a manner that limits U.S. IOR status to entities with sufficient U.S. substance and assets to permit the federal government to assert jurisdiction and recover customs liabilities. Forthcoming regulations will establish the required nature and extent of a U.S. presence and domestic assets. In the meantime, companies should evaluate their current structures against a range of potential standards. At a minimum, qualifying entities may need commercially substantive U.S. operations, including staffed office space and assets booked in the U.S. to cover potential customs liabilities associated with their annual U.S. imports.

2. Do the new importer definitions affect U.S. customs values?

The new importer definitions could have downstream impacts on the U.S. customs value for imported merchandise. The potential effect stems from the interaction between the IOR definitions, the EO’s restrictions on who may act as IOR for informal and formal entries, and CBP’s presumptions regarding transaction value, the primary method of customs valuation.

Under the EO’s new IOR-based restrictions, foreign entities and U.S. entities without sufficient U.S. substance will not be permitted to act as IORs for informal entries. In addition, such entities generally will not be permitted to act as IORs on formal entries unless they can secure single-entry bonds and either Customs Trade Partnership Against Terrorism (CTPAT) validation or a CTPAT-validated broker to file entries on their behalf.

CBP generally presumes that the price paid or payable by the IOR for imported goods is the basis for transaction value, unless the merchandise qualifies for entry under first sale for export valuation. Conversely, if an entity does not act as IOR, the price paid or payable by that entity is no longer presumed to be the basis for transaction value.

Instead, CBP may conclude either that the price paid by the entity acting as IOR — e.g., a downstream U.S. buyer with sufficient substance — is the basis for transaction value, or that no acceptable transaction value exists, requiring the sequential application of alternative customs valuation methods. If a downstream U.S. buyer acts as IOR and its price is used as the basis for transaction value, the customs value of the imported merchandise generally will increase, together with the duties, taxes, and fees owed to CBP. Applying an alternative customs valuation method likewise produces higher customs values, duties, taxes, and fees, while imposing additional administrative burdens. Either outcome would likely render certain customs value-based tariff mitigation strategies (e.g., unbundling of intercompany transfer prices) ineffective.

Additionally, even when the price paid by an IOR is presumed to be the basis for transaction value, CBP may reject the price paid by that IOR as the basis for transaction value if the price does not result from a bona fide sale, a CBP term of art. Sufficient substance in both the buyer and seller is a relevant consideration in CBP’s bona fide sale analysis. Given the new IOR definitions and the heightened disclosures required by the EO (e.g., beneficial ownership, business affiliations, domestic assets), CBP will be better positioned to challenge customs values in transaction value structures where the IOR’s substance does not support the existence of a bona fide sale.

The potential impacts to customs valuation discussed above are also consistent with policy statements in EO Section 1, which identify undervalued imports and the withholding of critical information about IORs among the problems the EO aims to address.

3. How should companies prepare for the increase in enforcement and build a defensible program? What does CBP look for, and how can companies monitor risks and activities to stay ahead of enforcement?

Companies can prepare by focusing on five interrelated areas: IOR substance, good standing, recordkeeping, customs controls and testing, and supply chain transparency.

IOR Substance

To prepare for increased enforcement, companies should first assess whether their importing entity meets the new U.S. IOR definition and whether an entity that has historically imported through a U.S. entity could instead be treated as a foreign IOR. If that risk exists, companies should evaluate the resulting effects on import operations, customs values, and estimated duties, taxes, and fees paid to CBP.

Good Standing

Once the EO’s implementing regulations take effect, all IORs, whether U.S. or foreign, will be required to remain in “good standing” with CBP. The EO directs CBP to evaluate the customs and trade compliance history of the IOR and its affiliates, including the payment of required customs liabilities. An IOR that is not in good standing with CBP generally will not be allowed to import into the U.S. or otherwise conduct activities directly related to importing goods, potentially resulting in a significant loss of market access.

Companies should monitor the pending good standing rulemaking process for more detailed requirements. They should also conduct and document appropriate due diligence on current IOR entities (including M&A targets with historical import activity), and evaluate corrective action for identified noncompliance (e.g., post-summary corrections on unliquidated entries, prior disclosures to CBP).

Recordkeeping

Companies should be prepared to demonstrate compliance with new and existing customs documentation and recordkeeping requirements (for the complete list of preexisting recordkeeping requirements, see 19 C.F.R. Pt. 163, Appx. (Interim (a)(1)(A) List)). Relevant documentation includes:

• Current and accurate CBP Form 5106 filings;
• Beneficial ownership and affiliation disclosures;
• Complete entry documentation;
• Supporting documentation substantiating customs valuation, origin, tariff classification, etc.; and
• Broker instructions and oversight documentation.

Producing the required documentation is only one part of an effective customs compliance program. Companies that rely on customs brokers or third parties to maintain customs records should ascertain whether that arrangement provides reliable access, appropriate retention, and timely production of records in response to CBP requests. Where those safeguards are insufficient, companies should consider bringing recordkeeping in-house or establishing stronger contractual controls and retrieval procedures.

Customs Controls and Testing

Companies should maintain policies, procedures, governance, and incident response processes that demonstrate the exercise of reasonable care in their customs-related activities. Documented customs risk assessments, controls, testing, and remediation can also help companies prepare for increased CBP inquiries, customs audits, trade fraud investigations, and potential Department of Justice referrals in the heightened enforcement environment.

Companies should consider conducting a trade fraud risk assessment to evaluate risks related to undervaluation, misclassification, false country-of-origin declarations, duty evasion, incomplete importer information, and other relevant issues. The assessment can help the company focus its compliance efforts on the highest-risk areas. Helpful frameworks for U.S. customs compliance risk assessments include CBP guidance on reasonable care and publicly available materials on CBP’s Focused Assessment Program.

CBP is increasingly relying on data analytics to identify anomalies and potential enforcement targets. Companies should respond with a repeatable monitoring process focused on high-risk imports and tariff exposure: define and periodically update red-flag indicators, analyze entry and tariff trends, review exceptions, monitor broker performance, document findings, and track remediation.

Supply Chain Transparency

Companies should strengthen supply chain transparency to support accurate customs declarations and timely responses to regulatory inquiries. This may include mapping supply chains beyond Tier 1 suppliers, verifying manufacturing locations, documenting origin determinations, assessing sourcing arrangements, and validating supplier-provided information. These efforts can help companies identify gaps before importation, substantiate customs positions, and respond more effectively to regulatory action.

4. Who is liable for customs violations?

For many violations of customs laws and regulations, the IOR is primarily liable, although liability may also extend to other parties that aid or abet such violations. While EO 14411 itself does not create a new liability framework, it strengthens CBP’s ability to identify the correct IOR, collect additional information, impose enhanced eligibility requirements, and increase enforcement against the IOR and other parties that aid or abet customs violations.

CBP may scrutinize IOR affiliates and related parties, including parent companies, beneficial owners, customs brokers, and other participants in the transaction. EO 14411 introduces enhanced beneficial ownership and business affiliation disclosure requirements, giving CBP greater visibility into the parties behind the importing structure. Additionally, the recordkeeping obligation under 19 U.S.C. § 1508 reaches any “owner, importer, consignee, importer of record, entry filer, or other party” involved in the transaction, as well as their agents. Accordingly, the enforcement exposure of parties other than the IOR is likely to increase once the EO’s implementing regulations are in place.

Companies should assess whether their commercial agreements align with IOR responsibilities, particularly where third parties influence customs declarations or maintain supporting records. Contracts should clearly allocate customs compliance responsibilities, recordkeeping obligations, cooperation requirements, and liability for noncompliance. Although contractual provisions may not eliminate regulatory liability, they can affect a company’s ability to defend customs declarations and recover costs arising from noncompliance. Companies should also consider including rights to require the production or inspection of documentation and supply chain records sufficient to validate information provided in support of the U.S. customs entry (e.g., origin, valuation, tariff classification) and conduct compliance audits.

This point is also relevant in M&A and third-party due diligence. Legal provisions and precedents govern successor liability for customs violations, and surviving or acquiring companies may be pursued for the associated customs liabilities. In a stock or equity acquisition, the importing entity continues to exist and carries any existing exposure forward to the buyer. In an asset purchase, a buyer can inherit such customs liability, depending on the transaction structure and applicable successor-liability principles. Customs and trade compliance diligence covering historical compliance and prior enforcement actions will therefore become even more critical in transactions as customs enforcement intensifies.

5. What historical customs exposure should companies assess?

Historical customs exposure can remain significant under EO 14411, particularly now that CBP will consider the compliance history of an IOR and its affiliates when determining whether the IOR is in good standing and whether its import privileges should be revoked. Companies with prior import activity should therefore identify and assess any unresolved or recurring customs compliance matters, including CBP audits, customs penalties, prior disclosures, duty underpayments, repeated entry corrections, or unpaid customs liabilities.

The period of historical exposure depends on the nature and culpability of the violation and the remedy CBP pursues, including administrative penalties, duty recovery, or litigation. Under 19 U.S.C. § 1621, CBP generally must commence a penalty action for negligence within five years after the violation. For fraud, the five-year statute of limitations generally begins when the fraud is discovered, rather than when it occurred. If fewer than two years remain when CBP starts reviewing a matter, CBP will typically request a voluntary statute of limitations waiver from the importer and any other allegedly liable parties.

Whistleblower actions are an additional concern when assessing historical customs exposure. Although EO 14411 does not create a new whistleblower program, its emphasis on importer and affiliate accountability, trade fraud, and supply chain transparency may increase attention to allegations in this area. Two existing mechanisms are relevant. Under 19 U.S.C. § 1619, CBP may pay a non-federal-employee informant up to 25% of the net amount recovered from duties, fines, penalties, or forfeitures, subject to a cap of $250,000 per case. Separately, the civil False Claims Act (31 U.S.C. §§ 3729–3733) allows private relators to bring qui tam actions (whistleblower lawsuits filed on behalf of the U.S. government) alleging that an importer knowingly avoided duties owed to the government; relators may receive 15% to30% of the government’s recovery, with no dollar cap. These actions have increased as tariff exposure has grown.

Historical exposure for customs violations may be more consequential for repeat offenders. EO 14411 signals that CBP will place increased emphasis on an importer’s compliance history and its ability to demonstrate sustained corrective actions, and it calls for eliminating mitigation for repeat offenders. Companies with recurring customs violations, unresolved findings, or repeated compliance failures may face heightened scrutiny and fewer opportunities for penalty mitigation than companies that proactively identify, remediate, and monitor customs risks.

Additionally, EO 14411 requires that the secretary of homeland security revise existing mitigation standards to align with the EO’s policy. The revisions must include “establishing a minimum penalty floor of not less than 50 percent of the assessed penalty…; establishing a minimum liquidated damages floor; and eliminating mitigation for repeat offenders.” Because the EO does not define “repeat offender,” forthcoming guidance will be important in determining which prior violations or compliance failures trigger that treatment. The stated policy is to preserve penalties at levels sufficient to deter violations, particularly repeat violations.

Civil penalties are governed by 19 U.S.C. § 1592, which sets three culpability tiers, each with a different statutory maximum absent a valid prior disclosure:

Where a valid prior disclosure has been filed (see below), the applicable penalty framework is set out in 19 U.S.C. § 1592(c)(4):

Under 19 U.S.C. § 1592 and 19 C.F.R. § 162.74, importers and other potentially liable parties may mitigate administrative penalties by making a qualifying disclosure of a customs violation to CBP before receiving notice that the government has commenced a formal investigation. Companies that identify a potential violation should promptly evaluate whether the matter qualifies for disclosure, preserve relevant records, quantify any potential loss of revenue, and determine whether corrective entry action is also required.

6. What new information should companies be prepared to provide CBP?

EO Section 2(a)(iii) directs CBP to request additional information from importers in the following categories:

• Entity-level data: anticipated import volumes, year the company was organized, ownership and beneficial-ownership disclosures, business-affiliation disclosures, and domestic (U.S.) asset disclosures;
• Compliance certifications: certifications of compliance with critical supply chain-related legal requirements (e.g., sanctions, forced labor) as identified by CBP in consultation with other agencies;
• Expanded entry and product data: additional product identifiers, key specifications, and supply chain information supporting classification, valuation, and country-of-origin positions;
• Cross-border identifiers: foreign tax identifiers and global business identifiers; and
• Foreign-IOR-specific items: evidence of CTPAT validation or use of a CTPAT-validated broker, together with evidence of adequate bonding/domestic assets.

The specific data fields and formats for these disclosures will be established through forthcoming rulemaking. In the meantime, importers should confirm that their CBP Form 5106 information is current and accurate, identify the internal owners of the entity, compliance, product, supply chain, and cross-border data that CBP may require, and establish processes for collecting, validating, and producing that information.