Customs compliance risks amid evolving U.S. trade measures and China customs enforcement

Effective 24 July 2026, new Section 301 tariffs came into force on products originating from 60 countries and territories following investigations conducted by the Office of the United States Trade Representative (USTR). The investigations concluded that the relevant jurisdictions had failed to adopt or effectively enforce measures prohibiting imports produced with forced labor.¹ Prior to that, President Trump issued Executive Order 14411 (EO 14411)² in June, directing the Department of Homeland Security (DHS) and U.S. Customs and Border Protection (CBP) to tighten importer oversight through enhanced importer eligibility, disclosure and bonding requirements.

At the same time, China Customs has continued to strengthen enforcement in areas including origin qualification, preferential tariff treatment under FTAs, transshipment arrangements and country-of-origin declarations. As businesses adjust supply chains in response to evolving trade measures, U.S. and China Customs authorities are increasingly scrutinising not only the origin of goods, but also the legitimacy of supply chain structures and the compliance profile of importers.

Against this backdrop, businesses should reassess their customs compliance frameworks and supply chain arrangements. This article examines key compliance risks arising from recent U.S. trade measures and evolving China Customs enforcement practices, with particular focus on origin verification, importer accountability and supply chain restructuring.

 

1. Section 301 Expansion and Enhanced Importer Oversight

Expanded Section 301 Tariffs

Additional duties of 10% or 12.5% have been imposed under a new Section 301 action affecting imports from 60 jurisdictions, including Mainland China and Hong Kong SAR. The measures took effect on 24 July 2026 following the expiry of the temporary Section 122 import surcharge. According to USTR, the action applies to the United States’ 60 largest trading partners, representing 99.4% of U.S. imports.³

In general, jurisdictions that have adopted, committed to adopt and enforce, or partially implemented restrictions on imports produced with forced labor are subject to a 10% additional duty rate, while the remaining investigated jurisdictions, including Mainland China and Hong Kong SAR, are subject to a 12.5% additional duty rate. Certain jurisdictions are subject to special duty calculations under which the applicable MFN duty rate is taken into account.

Unlike earlier Section 301 measures, which primarily targeted specific industries or products, the new Section 301 tariffs generally apply based on the country of origin of the imported goods. As a result, businesses should assess their exposure across a broader range of products and supply chains. Subject to certain exclusions, including products already covered by specified Section 232 measures, the new tariffs may be imposed in addition to ordinary customs duties and other trade remedies, including pre-existing Section 301 duties.

EO 14411: Enhanced Importer Oversight

• While the new Section 301 tariffs focus primarily on the origin of imported goods and the trade practices of exporting jurisdictions, EO 14411 shifts attention to the importer itself, including its ownership structure, financial substance and compliance profile. Under the Executive Order, DHS and CBP have been directed to strengthen requirements for Importers of Record (IORs) by tightening eligibility standards, expanding information disclosure obligations, enhancing beneficial ownership transparency and increasing customs bond requirements.

The reforms are expected to include:

• Higher importer qualification requirements. IORs may be required to maintain a prescribed level of tangible U.S. assets and/or customs bonding, and minimum bond coverage requirements are expected to increase.
  
  
• Expanded disclosure requirements. IORs may be required to provide CBP with additional information, including anticipated import volumes, ownership and beneficial ownership information, business affiliations, domestic asset information and other data that CBP considers necessary.
  
  
• Enhanced oversight of foreign IORs. Foreign IORs are expected to face stricter requirements, including limitations on the use of informal entry procedures, which are typically used for lower-value shipments, and additional conditions for the use of continuous customs bonds which cover multiple import transactions over a specified period.

Key takeaway

While the new Section 301 measures increase the cost of importing goods from China, EO 14411 may increase the compliance burden of importing into the United States. Businesses acting as IORs should evaluate not only their tariff exposure, but also whether their importer structures, customs bonding arrangements and U.S. operational presence are likely to satisfy anticipated CBP requirements. Early assessment may assist in mitigating compliance and operational risks as implementation measures are rolled out.

 

2. China Customs Enforcement Trends: Origin Compliance and Supply Chain Scrutiny

Alongside recent U.S. trade measures, China has continued to strengthen its own customs enforcement efforts, with a particular focus on origin compliance, transshipment arrangements, and country-of-origin declarations.

Enhanced Review of Preferential Origin Claims and Third-Country Transshipment

China Customs authorities are placing increasing scrutiny on claims for preferential tariff treatment under free trade agreements (FTAs), including RCEP, CEPA and other regional trade arrangements. Recent enforcement efforts have focused on the interpretation and application of origin rules, with China Customs authorities paying closer attention to whether imported goods genuinely satisfy the applicable origin criteria before preferential tariff treatment is granted. At the same time, China Customs authorities are strengthening oversight of third-country routing and processing arrangements that may alter the apparent origin of goods.

In particular, China Customs authorities are increasingly examining whether activities undertaken in intermediary jurisdictions constitute sufficient “substantial transformation” to confer a new origin, distinguishing legitimate value-added manufacturing operations from arrangements primarily intended to obtain preferential tariff treatment or mitigate trade remedy exposure. These efforts are accompanied by enhanced supply-chain traceability and information-sharing measures, enabling authorities to more closely track the movement of goods, production activities and supporting documentation across multiple jurisdictions.

Recent enforcement activity illustrates this trend. One area attracting particular attention involves imports of polyphenylene sulfide (PPS), which remains subject to Chinese anti-dumping measures when originating from Japan. Against this backdrop, Chinese authorities have reportedly paid particular attention to arrangements whereby Japanese-origin PPS is exported to ASEAN countries, subjected only to limited blending or other minor processing, and subsequently imported into China while claiming preferential tariff treatment under applicable FTAs. The key issue under review is whether the processing undertaken in the intermediary jurisdiction is sufficient to confer a new origin under the relevant rules of origin, or whether the products should continue to be regarded as originating from Japan and therefore remain subject to the applicable anti-dumping duties.

 

The PPS example highlights the increasing scrutiny of supply-chain structures involving third-country processing and underscores the importance of ensuring that preferential origin claims are supported by genuine substantial transformation rather than minimal processing activities. As businesses continue to restructure supply chains in response to tariffs, trade remedy measures and geopolitical developments, China Customs authorities are expected to focus increasingly on the commercial and manufacturing substance of such arrangements, rather than relying solely on the country from which the goods are exported.

Crackdown on Origin Fraud

China Customs authorities, together with other regulatory agencies, have intensified enforcement efforts against false origin declarations and other origin-related non-compliance. These efforts include enhanced customs inspections, greater inter-agency coordination, and stricter penalties for businesses found to have misrepresented the origin of imported or exported goods.

Recent enforcement cases indicate that China Customs authorities are paying particular attention to the authenticity of preferential origin documentation. For example, in several administrative penalty cases published by customs authorities in 2026, importers were found to have claimed preferential tariff treatment under the China-ASEAN FTA on the basis of origin certificates that were subsequently determined not to have been officially issued by the competent authorities of the exporting country. In one case involving imports of lead-antimony alloy ingots, the importer submitted a non-genuine China-ASEAN FTA certificate of origin in support of a Malaysian origin claim, resulting in underpaid duties and an administrative penalty.⁴

Similarly, customs authorities in Yunnan sanctioned multiple companies that relied on non-authentic origin certificates for imports of agricultural products, including dried mung beans, konjac slices, dried ginger and sugar syrup.⁵ In these cases, China Customs authorities denied preferential tariff treatment, reassessed the applicable duties and imposed administrative penalties on the importers. Several decisions also highlight that importers may be held liable even where the inaccurate origin documentation was obtained from overseas suppliers, particularly where the importer failed to undertake adequate verification of the certificates’ authenticity.

As enforcement activity continues to increase, businesses should ensure that origin declarations, tariff classifications and supporting customs documentation are accurate, consistent and supported by adequate internal controls. Robust compliance procedures are increasingly important, particularly where businesses are restructuring supply chains, relying on preferential tariff treatment, or utilizing cross-border manufacturing and sourcing arrangements.

Key takeaway

Businesses with regional or global supply chains should ensure that origin positions are supported by robust documentation and substantive manufacturing or processing activities. Periodic reviews of origin analyses and supporting documentation can help identify potential compliance gaps before they become subject to regulatory scrutiny.

 

3. Conclusion

Recent developments in both the United States and China point to a broader trend of increased customs enforcement and heightened scrutiny of global supply chains. In the United States, the new Section 301 tariffs and EO 14411 reflect a policy focus not only on the origin of imported goods, but also on the transparency, financial substance and compliance profile of importers. In China, Customs authorities are placing greater emphasis on origin verification, preferential tariff claims, third-country processing arrangements and the prevention of origin-related non-compliance.

As businesses continue to respond to tariffs, trade remedies and geopolitical developments, customs authorities in both the United States and China are increasingly looking beyond formal documentation to assess the underlying commercial rationale and operational substance of supply chain arrangements. Businesses should therefore proactively review their importer structures, origin analyses, tariff classifications, customs documentation and supporting records to ensure that they can withstand heightened regulatory scrutiny.

In an increasingly complex enforcement environment, customs compliance is no longer simply an operational or administrative function. It should form an integral part of broader supply chain planning, trade risk management and business strategy. Proactive risk assessments, well-supported origin analyses and robust documentation practices will be critical in mitigating potential duty exposure, enforcement action and supply chain disruption.

 

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¹ https://ustr.gov/about/policy-offices/press-office/press-releases/2026/july/ustr-takes-action-forced-labor-section-301-investigations
² https://www.whitehouse.gov/presidential-actions/2026/06/strengthening-customs-enforcement/
³ https://ustr.gov/about/policy-offices/press-office/fact-sheets/2026/july/fact-sheet-ustr-section-301-action-response-failure-60-economies-ban-imports-produced-forced-labor
⁴ 中华人民共和国海曙海关行政处罚决定书甬曙关缉违字〔2026〕65号
⁵ 海关行政处罚案件信息公示（打洛关缉违字〔2026〕72号, 海关行政处罚案件信息公示（河口关缉违字〔2026〕31号, 海关行政处罚案件信息公示（瑞丽关违字〔2026〕103号）