Industry News
New EO Aims to Cut Open Shell Co. Importers
TweetJun. 5, 2026
By:
Pietro N. Bianchi
President Trump issued an executive order, “Strengthening Customs Enforcement,” which greatly increases the compliance burden on foreign importers of record (“IOR”). The order indicates that the measures are intended to protect national security and promote lawful trade. The new or increased requirements are summarized in a fact sheet accompanying the order:
- Increasing bonding requirements and requiring IORs to maintain at all times a minimum level of tangible domestic assets, bonding, or both;
- Subjecting foreign IORs to heightened requirements for formal entry;
- Prohibiting foreign IORs from filing informal entry;
- Imposing a “good standing” requirement on all IORs; and
- Increasing vetting procedures for individuals and entities that conduct activities directly related to the importation of goods.
Significantly, foreign IORs will no longer be able to make informal entry, which is a simplified entry process for merchandise valued at $2,500 or less. This provision is in step with the removal of de minimis shipments. Also of note is that foreign IORs will need to join CTPAT or use a broker that is a member of CTPAT.
The Secretary of Homeland Security has 180 days to effectuate this order and has indicated that stakeholders will be consulted. This means that all IORs have the opportunity to review the proposed changes and evaluate how the are impacted by them. Company’s that may qualify as “foreign IORs” under the order need to give serious thought to how they want to approach importing into the United States.
The order states that a “foreign IOR” is any IOR that is not a U.S. IOR. An individual, under the order, is a U.S. IOR when he or she is a United States citizen or a lawful permanent resident. Probably more significant for this audience, an entity is a U.S. IOR when it:
- Is organized under the laws of the United States;
- Is located in the United States; and
- Has at all times controlling beneficial owner(s) who are United States citizens or lawful permanent residents, or
- Owns a significant amount of real property in the United States, as determined by the Secretary.
While the Secretary of Homeland Security shall provide further guidance concerning the meaning of the term “located in the United States,” the order provides that at a minimum, to be “located in the United States” an entity must have:
- Its principal place of business in the United States;
- A physical presence where significant business activity is conducted in the United States; and
- Sufficient tangible assets located in the United States, taking into account the size and scale of the overall operations of the company and whether the entity is an instrumentality of a foreign manufacturer without a substantial United States presence.
