New Customs Enforcement Order Signals Greater Risks for Importers, Manufacturers, and Government Contractors

by Matthew P. Suzor and Riya Mittle

The White House issued Executive Order 14411 (“Executive Order” or “Order”) titled “Strengthening Customs Enforcement” on June 3, 2026, which directs federal agencies to overhaul importer requirements, increase penalties, tighten scrutiny of foreign importers, and expand enforcement efforts targeting customs fraud.  The order reflects a broader federal focus on tariff compliance, duty collection, supply chain transparency, and importer accountability.

The Changes the Executive Order Makes to Importer-of-Record Requirements and Customs Compliance Obligations

An Importer-of-Record (“IOR”) is a person or company who is legally responsible for ensuring that foreign goods entering the United States are compliant with customs obligations.  An IOR should properly classify imports, file appropriate documentation, obtain licenses, and more.  Section 2 part (a) of the Order outlines three revisions to importer eligibility regulations:

1. a minimum asset/bond requirement amount for an IOR,
2. a requirement that each shipment has a clear IOR and financial backing, and
3. heightened disclosure requirements about the importer’s real identity.

As explained by the White House, the Executive Order also changes customs compliance obligations.  The Department of Homeland Security (“DHS”) and U.S. Customs and Border Protection (“CBP”) will implement changes that include establishing a minimum penalty floor for violators, enhancing the seizure and disposal of imports that are non-compliant, and publishing transparency reports annually.  Such changes are intended to support national security, align the U.S. with foreign partners, and address systemic customs issues.

Types of Customs Fraud and Duty Evasion Practices That are Likely to Face Greater Government Scrutiny

The Executive Order explains how the Secretary  of Homeland Security and Attorney General should “prioritize the enforcement of Federal law relating to importations involving [1.] products produced by forced labor, and [2.] importations involving misclassification, [3.] undervaluation, and [4.] illegal transshipment, including investigations conducted pursuant to the Enforce and Protect Act.” More specifically, pursuant to the Order:

1. Importers that cannot verify that their goods comply with forced labor restrictions will likely face heightened review, such as having to provide “supply chain and production methods”;
2. Action would be taken if there is non-compliance with rules governing revenue collection and proper import declarations to “bolster the enforcement of customs laws”;
3. “undervaluing imports” were identified as an example of customs noncompliance targeted by the reforms; and
4. If an IOR engages in an illegal transshipment, it may not be in “good standing,” which means the IOR cannot import to the U.S. or conduct import activities.

Enhanced Customs Enforcement Affects Companies That Import Products into the United States, Including Increased Exposure To The False Claims Act

Following the Executive Order, the CBP published guidance stating that “importers are required to provide more detailed information about their ownership, business operations, and supply chain, and must maintain good standing with CBP to continue importing.”  These additional disclosures and compliance requirements increase the level of scrutiny placed on importers.  As such, companies may devote more resources to recordkeeping, supply-chain verification, and regulatory compliance.  According to The Anti-Fraud Coalition, these measures are expected to strengthen customs compliance among foreign entities and the government’s ability to enforce violations.

For companies that import goods into the U.S., the changes may increase regulatory obligations, audit risks, and potential exposure under the False Claims Act (“FCA”).  The American Association of Exporters and Importers explains that customs noncompliance can result in liability under the Reverse FCA Provision, which is “when a person or company knowingly avoids paying money owed to the Government.”   Specifically, courts have found that if an importer does not pay the appropriate duties on products it imports, this could result in a reverse false claim.  As such, companies that import to the U.S. will have to follow a stricter set of rules to be in compliance.

Steps Businesses Can Take Now to Strengthen Customs Compliance and Reduce Enforcement Risk

There are a multiple steps that a business can take now to strengthen its customs compliance.  A company can effectively reduce enforcement risk by:

1. regularly reviewing information to stay informed of evolving regulations,
2. prioritizing compliance training so employees are knowledgeable,
3. ensuring tariff classification accuracy with proper codes, and
4. preparing before audits to streamline and quicken the process.

Further, an organization can build a culture of customs compliance that takes a proactive approach.  Having a culture of thoroughness, transparency, and responsibility is a key component of effective compliance with import laws and regulations. “Continuous strategies like reconciliation, error correction, and robust record-keeping” can help ensure cohesive and compliant international trade operations.

The legal team at Miller Shah LLP has extensive experience litigating FCA and qui tam matters.   Individuals with information about potential customs fraud may consider speaking with counsel.