Trump signs order to tighten customs enforcement, curb tariff cheats

Trump's order targets customs loopholes by cracking down on shell companies, inadequate customs bonds, and shipment-routing schemes used to conceal the true origin of imported goods

By Catherine Lucey, Skylar Woodhouse and Laura Curtis

  President Donald Trump signed an executive order designed to tighten customs enforcement, his latest move to ramp up protectionist trade policies.  

The policy Trump signed on Wednesday directs Customs and Border Protection officers to use new technology to ensure contraband and illegal goods are detected and blocked from entering the US, and that products brought in are accurately accounted for, according to a White House statement. 

 

“This executive order is really the result of many years of our front-line officers and our trade professionals seeing the tricks and abuse that the companies that were trying to cheat the system have been using,” said CBP Chief of Staff James Kernochan on a call with reporters after the order signing.

 

 

Officials said the order would address issues that have plagued the customs agency’s ability to enforce trade policy, including importers’ use of shell companies, insufficient customs bond requirements, and schemes that route shipments through a third country in order to hide the true origin of the goods.

 

White House staff secretary Will Scharf said during the signing that the order is intended to provide CBP with more information bout importers-of-record, or IORs, and that they correctly report what they are bringing in. Foreign companies that bring goods into the US will face stricter compliance requirements as well. There was a record $112 billion gap last year between what China reported exporting to the US and what was declared to CBP, Bloomberg News previously reported. 

 

“Examples of noncompliance include undervaluing imports, withholding critical information about IORs and the goods being imported, and avoiding payment of duties through various arrangements and schemes,” the order said.

 

The order also ramps up the use of artificial intelligence by customs authorities. 

 

“We’re in the process of being able to — in real time — track every single ship and shipment that leaves every single port every day, process literally billions of bits of data, and determine with a high degree of probability, whether or not there’s some tariff evasion or possibly other problems like drugs, illegal contraband,” said White House trade adviser Peter Navarro on the call with reporters.

 

He also stressed the potential for boosting revenue collection from US importers. “We’re literally going to be able to pick up tens and tens of billions of dollars just in tariff evasion alone,” Navarro said.

 

Trump signed the order one day after his administration proposed new tariffs of at least 10 per cent on 60 economies accused of failing to crack down on imports produced using forced labor. It was the first major step toward rebuilding Trump’s tariff agenda after his global duties were struck down by the Supreme Court.

 

The order won’t take effect right away, and many of the rule changes will be developed with input from stakeholders across the trade industry. Other changes will require legislative changes, and those proposals are being teed up over the next 45 days, according to CBP’s Kernochan.

 

“There’s a lot of sub-components to this executive order, and there’s a lot of regulation that’s going to be fleshed out in the next few months,” he said.