The White House has issued an executive order that tightens U.S. customs requirements for importers and enacts tougher penalties for violations.
Law firm Snell & Wilmer described the directive as a means to target common tariff-avoidance practices. That includes arrangements where foreign suppliers act as the importer of record, the use of U.S. shell companies with few assets, and changes to product classifications, valuations or countries of origin intended to reduce tariff obligations. The firm warned that companies relying on such practices could face increased scrutiny from customs officials, as well as steeper financial penalties if violations are discovered.
“This executive order helps CBP better detect when bad trade actors try to break the rules,” said CBP Office of Trade Executive Assistant Commissioner Susan Thomas. “These are major advances in protecting our revenue and increasing supply chain transparency — both critical to ensuring fairness for everyone and safeguarding our nation’s economic and national security."
According to a June 3 release, the executive order requires importers to provide detailed information about their ownership, business operations and supply chains. Importers must also maintain good standing with U.S. Customs and Border Protection in order to continue shipping goods into the U.S.
As law firm Holland & Knight points out, the executive order also limits the ability of companies to qualify for customs penalty reductions, by setting the maximum reduction at 50% of the original amount assessed by CBP.
"The cost of getting it wrong has substantially increased," Holland & Knight noted. While the prior framework meant penalties could frequently get mitigated to far smaller amounts, "that era appears to be over."
