New Executive Order Strengthens Customs Enforcement Against Forced Labor and Illegal Transshipment

In our recent blog, Section 301 report: key findings and implications, we discussed the USTR report that put 60 global economies on notice for extensive failings in forced labor enforcement and proposed steep tariffs in response.

A day after the report’s publication, on June 3, 2026, President Trump signed Executive Order 14411, 'Strengthening Customs Enforcement', designed to send a signal to DHS and the larger market that a tougher enforcement posture is here, including by tightening who can act as an importer of record, raising the assets and bonds importers must hold, expanding border disclosures, and stiffening penalties for violations.

The executive order (EO) instructs U.S. Customs and Border Protection (CBP) to prioritize enforcing federal law against imports produced by forced labor and goods illegally transshipped to disguise their true origin, closing what the order calls “opportunities for malign actors to evade Federal law.”

The Department of Homeland Security (DHS) now has 45 days to recommend new customs legislation, 90 days to revise penalties and entry documentation requirements, and 180 days to write the rules that will decide who can import at all.

Importers of record face a new standard of accountability

The changes fall heaviest on the importer of record (IOR), the party legally responsible for duties owed and compliance with U.S. law.

Within 180 days, the DHS must revise importer eligibility rules to require that every IOR maintain a minimum level of tangible domestic assets, bonding, or both. Importers must also provide CBP far more information about themselves, including who owns them, who they are affiliated with down to the beneficial ownership level, what assets they hold in the country, year of organization, and projected import volumes.

As a result, onboarding as an importer can become more document-heavy, particularly for brands importing through multiple entities or sourcing agents.

CBP is also directed to update its importer registry within the same 180-day window by removing inactive importers, sorting active importers into risk-based tiers built on compliance history, enforcement actions, and audit results, and applying recurrent vetting to every party involved in the import process, from customs brokers and freight forwarders to custodians of bonded merchandise.

Foreign importers face tougher rules

The EO treats U.S. and foreign IORs differently, imposing three strict new limitations on foreign entities:

1. DHS is ordered to close informal entry to foreign IORs (which currently bypasses formal clearance for goods valued at $2,500 or less). Foreign importers relying on low-value, high-volume shipments must now file formal entries for all of them.
2. Foreign IORs can lose access to continuous bonds for formal entries unless CBP determines U.S. revenue is fully protected. Without a continuous bond, foreign importers must buy a separate bond for each entry, which could lead to more paperwork and more cash flow locked up with each shipment.
3. A foreign IOR must be validated under the Customs Trade Partnership Against Terrorism (CTPAT) or file entries through a CTPAT-validated, licensed customs broker.

To qualify as a U.S. (rather than foreign) IOR, an entity needs a principal place of business in the U.S., a physical presence where large business activity happens, sufficient tangible assets, and controlling beneficial owners who are U.S. citizens or lawful permanent residents. DHS has been ordered to write strict guidance to prevent entities from using shell companies or sham transactions that fake a U.S. presence.

Given these heightened barriers for both domestic and foreign entities, businesses cannot overstate the importance of working with thoroughly verified suppliers who can transparently back up their operations.

Disclosure requirements reach further into the supply chain

The executive order substantially raises the documentary bar at the point of entry. It mandates certifications of compliance with critical supply chain laws, disclosure of foreign tax and global business identifiers, and detailed information about how and where a product was made, down to the manufacturer’s product identifier and key specifications such as composition or grade.

Within 90 days, CBP will require importers to submit any documentation the foreign exporter filed with its own customs authority before shipping to the U.S. CBP will cross-reference these documents to catch discrepancies between what is declared at export and what is declared at the U.S. border.

Penalties grow larger and harder to escape

The enforcement priorities named in the order will be familiar to readers of our Section 301 analysis. The Secretary of Homeland Security and the Attorney General are directed to prioritize enforcement against imports produced by forced labor, together with misclassification, undervaluation, and illegal transshipment, including investigations under the Enforce and Protect Act (EAPA).

The transshipment priority connects directly to the USTR report, which documented how restricted Chinese cotton moves through intermediary countries such as India, Indonesia, Jordan, Mexico, Pakistan, Sri Lanka, and Vietnam to hide its true origin.

While the Section 301 report identified the practice, EO 14411 gives CBP the tools to act on it.

Penalties will be much harder to mitigate once DHS revises its mitigation standards (due within 90 days). The new guidelines will enforce a minimum penalty floor of at least 50% of the assessed compliance violation, with zero mitigation allowed for repeat offenders. Customs brokers can also face maximum penalties for weak due diligence, representing noncompliant clients, or failing to cooperate with CBP requests in a timely manner.

Stronger enforcement demands stronger evidence

With DHS revising the rules of U.S. trade, brands must treat this six-month window as their preparation period. CBP will want to know who stands behind your imports, how your affiliates behave, and whether your records tell a consistent story.

Brands that can answer those questions today will be best prepared for whatever comes.

• Audit your compliance history: Review prior detentions and penalties now to see where CBP has flagged your shipments in the past. Under the new EO, a single unresolved issue can compromise your “good standing,” making it highly critical to know exactly where your historical compliance gaps and raw material origin risks intersect.
• Verify origin claims at the source: More entry data, exporter documentation cross-checks, and risk-based importer tiers give CBP more visibility into inconsistencies. Verify that your commercial, logistics, and customs records all tell the same origin story, along with how you would substantiate it if CBP questions the paperwork.
• Rework foreign import structures around origin risk: Brands importing through foreign IORs, particularly in the low-value segment, will need to restructure their import model within months. Build robust origin verification into any new entity structure from day one.