In brief
Two announcements in early June 2026 mark a step change in how the United States enforces forced labour prohibitions at the border and which entities may act as Importer of Record, and both have direct consequences for Australian businesses that import into, or trade through, the US.
On 3 June 2026, the US President signed an Executive Order on Strengthening Customs Enforcement, prioritising enforcement against goods produced with forced labour and tightening Importer of Record (IOR) eligibility, bonding, disclosure and penalty settings.
One day earlier, on 2 June 2026, the United States Trade Representative (USTR) determined that the practices of 60 economies, including Australia, in failing to impose and effectively enforce a prohibition on the importation of forced labour goods are actionable under Section 301 of the Trade Act of 1974, with proposed additional duties of 10% or 12.5% on virtually all products of those economies. Combined with Australia's own Modern Slavery Act reform consultations, these measures sharply increase the cost of weak supply chain controls.
In detail
Strengthened Customs Enforcement announced on 3 June 2026
The Executive Order on Strengthening Customs Enforcement directs the Secretary of Homeland Security, working with US Customs and Border Protection (CBP), to undertake the most comprehensive overhaul of US import controls in a generation. The Order is framed as a response to "systemic inefficiencies, loopholes, insufficient enforcement mechanisms, and outdated processes" and identifies forced labour, rules of origin, origin marking, intellectual property, revenue collection and product safety as the priority compliance areas. The substantive measures fall into several broad streams.
Importer of Record reform - Within 180 days, CBP must revise IOR eligibility regulations to require minimum tangible domestic assets and/or bonding, increased minimum bond coverage, and detailed data submissions including anticipated import volumes, ownership and beneficial ownership disclosures, business affiliations and domestic asset disclosures. A foreign IOR will not be permitted to file informal entries, and for formal entries a foreign IOR generally cannot rely on a continuous bond and must either be Customs Trade Partnership Against Terrorism (CTPAT) validated or use a CTPAT validated and licensed customs broker. Critically, CBP will define and enforce a "good standing" requirement, with IORs not in good standing prohibited from importing or having a broker act as IOR on their behalf.
Heightened import disclosure and certification - Importers will be required to certify compliance with critical supply chain laws (including the Countering America's Adversaries Through Sanctions Act and 18 USC 545), to disclose foreign tax and global business identifiers, and to provide detailed supply chain and production information such as manufacturer product identifiers, composition, grade and size. Within 90 days, CBP must require submission of any documentation that the foreign exporter was required to submit to its own customs administration prior to export.
Enforcement and penalties - The Secretary and Attorney General are directed to prioritise enforcement of laws relating to forced labour, misclassification, undervaluation and illegal transshipment, including investigations under the Enforce and Protect Act. Mitigation standards must be revised within 90 days to introduce a minimum penalty floor of not less than 50% of the assessed penalty (absent exceptional circumstances), a minimum liquidated damages floor, and the elimination of mitigation for repeat offenders.
Streamlined seizure and disposal, transparency, and legislation - CBP will accelerate seizure and disposal of non-compliant imports, increase bonding for high-risk shipments, publish annual enforcement transparency reports, and recommend supporting legislation to the President within 45 days.
For Australian exporters and the Australian-headquartered groups that act as US IOR for their goods, the practical consequence is that the bar to entering the US market is moving materially higher, and the cost of getting it wrong (in penalties, delays, and reputational impact) is increasing.
The table below summarises the specific changes Australian businesses should expect.
| Area | Current state | Future state under the EO |
|---|---|---|
| IOR classification | Treated similarly to a US IOR for most operational purposes. | Australian exporters with no US legal entity, no US principal place of business, and no US-citizen controlling beneficial owners will be clearly classified as "foreign IORs" and treated differently to US IORs. |
| Bonding | USD 50,000 continuous bond covering all entries. | A continuous bond will generally not satisfy CBP for a foreign IOR unless the importer can demonstrate that revenue is fully protected and compliance is assured. Expect single-entry bonds, materially higher minimum bond coverage, and/or a requirement to hold tangible US-domestic assets. |
| Informal entry (Direct to Consumer parcels) | Available for low-value shipments. | Prohibited for foreign IORs. Low-value parcels must either be routed via a US IOR or moved to formal entry, with the additional compliance burden that entails. |
| Customs broker | Any licensed US broker. | Foreign IORs must either be CTPAT-validated themselves (where eligible) or use a CTPAT-validated and licensed broker. |
| Disclosures | Standard entry data. | Foreign IORs must provide anticipated import volumes, year organised, ownership and beneficial ownership, business affiliations, and domestic asset disclosures. New supply chain certifications and foreign tax / global business identifiers will also be required. |
| Foreign export records | Not routinely shared with CBP. | Within 90 days, foreign IORs will need to submit to CBP whatever they provided to the Australian Border Force on export - so US and Australian declarations must reconcile. |
| Good standing | No formal regime. | All IORs and their affiliates will be assessed against a CBP "good standing" test based on compliance, payment history, and enforcement record. Loss of good standing means loss of the ability to import - or to designate a broker as IOR. |
| Risk tiering and vetting | Limited differentiation between importers. | Importers will be placed in a risk-based tier based on compliance history, audits, and enforcement actions, with recurrent vetting of the company, its affiliates, brokers, and freight forwarders. |
| Penalties | Mitigation and reductions routinely available. | Minimum penalty floor of at least 50 percent of the assessed penalty, a minimum liquidated damages floor, and no mitigation for repeat offenders. |
Why does the USTR new Section 301 tariff announcement matter for Australia?
On 2 June 2026, USTR determined that the acts, policies and practices of 60 economies relating to the failure to impose and effectively enforce a prohibition on the importation of goods produced with forced labour are unreasonable or discriminatory and burden or restrict US commerce, and are therefore actionable under Section 301(b) of the Trade Act of 1974.
Australia is named in the list of 54 economies (alongside China, India, Japan, the United Kingdom, New Zealand, the European Union member states by reference, Vietnam, Malaysia, Thailand, Indonesia and others) that have failed to impose and effectively enforce a forced labour import prohibition.
USTR has proposed responsive duties on all products of the investigated economies (subject to limited exclusions). The proposed rate is 10% for economies that already impose, or have committed under an Agreement on Reciprocal Trade or partial regime to impose, an effective forced labour import prohibition, and 12.5% for all other economies, including Australia. A textile mechanism would allow a defined volume of apparel and textile imports from certain economies to enter at a reduced Section 301 rate. The public comment window runs until 6 July 2026, with a hearing on 7 July 2026 and the deadline to lodge a request to appear at the hearing 22 June 2026.
This investigation sits alongside the existing Section 301 architecture (which we discussed in our recent alert on the US Supreme Court IEEPA decision) and is unaffected by the IEEPA ruling because Section 301 is an express, bounded delegation of tariff authority.
How might this shape Australia's modern slavery reforms?
The Australian Government's December 2024 response to Professor John McMillan AO's statutory review of the Modern Slavery Act agreed (in full, in part or in principle) to 25 of 30 recommendations, including consultation on civil penalties, a lower reporting threshold (proposed at AUD 50 million annual consolidated revenue), incident-based reporting, and a due diligence obligation. Australia's first Anti-Slavery Commissioner, Mr Chris Evans, was appointed on 2 December 2024 for a five-year term.
On 30 January 2026 the Commissioner released a position paper recommending two reforms in response to the Government's targeted consultations:
a mandatory, risk-based modern slavery due diligence obligation for reporting entities; and
a mechanism allowing the Commissioner to declare that a product, service or industry carries a high risk of modern slavery, with reporting entities required to have regard to those declarations in their due diligence and reporting.
The US Section 301 finding is likely to accelerate, rather than displace, that domestic reform agenda. Several pressures are now aligned. From the US side, Australia is incentivised to demonstrate that it imposes and enforces an effective forced labour import prohibition (which would justify the lower 10% rate, or potentially an Annex A exclusion) and to consider whether to commit to a forced labour import prohibition through an Agreement on Reciprocal Trade. From the domestic side, the Anti-Slavery Commissioner's high-risk declaration mechanism would provide a natural domestic counterpart to a Customs-side import prohibition, and would map onto the kinds of evidentiary disclosures that the new US customs settings will increasingly demand at the border.
The takeaway
What should Australian businesses be doing now?
The next 30 days are critical for any Australian business with material US exposure or with supply chains running through the 60 named economies. We recommend the following sequenced response.
Quantify the Section 301 forced labour exposure - Map US-bound exports (and goods imported into the US under your IOR) by Harmonised Tariff Schedule (HTS) code, country of origin and value. Stack the prospective 10%/12.5% Section 301 forced labour duty over existing Section 232, Section 301 (China) and Section 122 measures to identify where landed cost moves materially. Test whether the textile mechanism or exclusions are likely to apply.
Engage in the USTR process - Lodge requests to appear by 22 June, and written comments by 6 July. Comments are most persuasive where they are evidence-based and address the proposed remedy (rate, scope, textile mechanism, exclusions) and the conditions under which the rate could be reduced or removed.
Prepare for the new US customs enforcement settings - Review IOR structures and ownership; confirm whether the IOR meets the proposed "U.S. IOR" definition (US citizen or lawful permanent resident, or entity organised, located in the US with controlling US beneficial owners or significant US real property); assess CTPAT eligibility; and prepare for higher bonding, increased disclosure (including beneficial ownership and supply chain detail), and a "good standing" compliance posture. Importers with foreign IOR structures should expect to lose access to informal entry and to face heightened formal entry requirements.
Strengthen forced labour due diligence now, in anticipation of Australian reform. Move beyond statement-based reporting to a documented, risk-based due diligence system aligned with the UN Guiding Principles on Business and Human Rights and the OECD Guidelines. Prioritise high-risk commodities (structural steel, electronics, apparel and textiles, polysilicon and solar PV, automotive parts, critical minerals) and high-risk geographies (Xinjiang and other regions identified in Uyghur Forced Labor Prevention Act (UFLPA) Entity List, and the broader 60 USTR-named economies). Build evidence packs that can support disclosures both into the US (under the new Executive Order) and into any future Australian customs-side regime.
Review contracting and pricing. Update force majeure, change-of-law, and pass-through clauses to deal with the cumulative US duty stack. Consider whether origin-shifting, tariff engineering or first-sale-for-export structures are available within the bounds of substantial transformation rules. Document each step to support representations to CBP and to the proposed CBP "good standing" assessment.
How can PwC support?
PwC's Global Trade practice can support clients across each of the layers raised above.
Section 301 impact assessment and submissions: quantification of duty exposure across HTS codes and origins, scenario modelling of the 10%/12.5% rates layered with Section 122/232/301 measures, drafting of comments for the USTR docket and preparation for the 7 July hearing.
US customs readiness: review of IOR structures against the new "U.S. IOR" definition, bond and CTPAT positioning, beneficial ownership and supply chain disclosure readiness, and "good standing" compliance frameworks. We can accelerate this through our Trade Analytics Platform, which extracts entry-level data from the US Automated Commercial Environment (ACE) and Australian Integrated Cargo System (ICS).
Forced labour due diligence: design and implementation of risk-based due diligence systems, supplier mapping and verification (including beyond Tier 1), Xinjiang and high-risk region screening aligned with UFLPA, and integration with Modern Slavery Act statements and proposed mandatory due diligence obligations. Our work draws on PwC's network of human rights and ESG specialists.
Customs origin and tariff engineering: review of substantial transformation, first sale, and valuation positions; review of free trade agreement claims (including USMCA and Australia-United States Free Trade Agreement); and origin documentation that will withstand the heightened CBP disclosure regime.
Board, Audit Committee and CFO briefings: integrated briefings on the cumulative impact of the IEEPA decision, Section 122/232/301 settings, the new customs Executive Order, the Section 301 forced labour findings and Australian Modern Slavery Act reform, with practical action plans.
The combination of US enforcement intensification and Australian regulatory reform means that, for the first time, the way an Australian business manages forced labour risk in its supply chain will directly determine the duty rate it pays at the US border, the access it has to US import privileges, and the legal exposure it carries domestically. The businesses that act in the next 30 days, before the USTR comment window closes and before the new CBP regulations are settled, will have a meaningful advantage over those that wait.
Contact us
Paul Cornick
Partner, National Global Trade Leader, PwC Australia
Gary Dutton
Partner, National Global Trade Leader, PwC Australia
Frances Ryan
Director, Global Trade and Excise, PwC Australia
Sarah Macchiavelli
Director, Global Trade and Excise, PwC Australia
Melissa Camilleri
Director, Global Trade and Excise, PwC Australia
Lara Jobling
Director, Global Trade and Excise, PwC Australia
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