As the (Customs and Trade) World Turns: October 2026

We are navigating an unpredictable and fast-changing trade landscape and what we are reporting today may change by tomorrow (or in the next hour). However, our team regularly issuing reports and alerts to help our clients and friends stay up to date. Sign up here for regular updates and receive this newsletter each month. 

This edition provides essential insights for sectors including international trade, national security, aluminum, steel, and copper industries, fashion and retail, automotive, life sciences, electronics, artificial intelligence, transportation, electric mobility, e-commerce, shipping and logistics, and compliance, as well as for in-house counsel, importers, and compliance professionals. 

In this October 2026 edition, we cover:

1. IEEPA Refunds: CBP opened CAPE Phase 3 for CIT plaintiffs, and the CIT certified an importer class that could open a refund route for everyone else.
2. Syria and ITAR: DDTC took Syria off ITAR § 126.1, so defense export licenses are now reviewed case by case instead of denied.
3. IOR Deactivations: CBP deactivated 5.3 million inactive IOR numbers and is now voiding numbers with inaccurate Form 5106 data.
4. Palm Oil WROs: CBP issued WROs on palm oil from two Indonesian producers over forced labor concerns.
5. Section 232 Pharma Tariffs: BIS set a 0% rate for nine specialty pharmaceutical categories from eligible countries, while other patented drugs face tariffs of up to 100%.
6. DOJ Directive 26-12: The DOJ made trade fraud a priority and set charging factors that fit common customs fraud schemes.
    

1. IEEPA Refunds: CBP Opens CAPE Phase 3 as CIT Certifies Importer Class

On October 6, US Customs and Border Protection (CBP) deployed Phase 3 of the Consolidated Administration and Processing of Entries (CAPE) program, its refund platform for duties collected under the International Emergency Economic Powers Act (IEEPA). CBP informed the Court of International Trade (CIT) that Phase 3 “successfully deployed” on October 6.

Who Can File: Phase 3 is open only to CIT plaintiffs whose entries are covered by the court’s order directing reliquidation of finally liquidated entries. There are other procedural steps required for reliquidation, such as counsel submitting the plaintiffs’ importer of record (IOR) numbers to CBP and on CBP’s acceptance of the plaintiffs’ CAPE declarations. CAPE does not currently accept finally liquidated entries of importers that have not filed suit. 

Class Certification: On October 8, CIT Judge Richard K. Eaton certified an injunctive class in Freestyle World over the government’s opposition. The class covers all IORs that paid duties under the challenged IEEPA tariff orders between February 1, 2025, and February 19, excluding any entity that has separately filed an action seeking to recover IEEPA duty payments. The class seeks an injunction directing CBP to liquidate or reliquidate entries without regard to IEEPA duties, but the court has not yet entered that injunction. The court stated that it “is certifying a class in the hope, and expectation, that this certification will lead to the liquidation or reliquidation of all of the entries on which the unlawful IEEPA duties were imposed, and the refund of those duties to the importers of record that paid them.” The court scheduled a closed conference for October 13 and directed the parties to submit a joint proposed scheduling order by October 22, including the date by which the government must answer or otherwise respond to the class action complaint.

And the Fox Says…: The class could eventually provide a refund path for importers that have not filed their own suits. However, significant open questions remain, including the timing of further proceedings and any injunction, a widely expected government appeal, and how class membership interacts with individual suits. Importers should monitor developments and consult counsel regarding their options.

Contributors: Mario A. Torrico, Denny Peixoto, Nancy A. Noonan, and Antonio J. Rivera

2. Syria Removed From ITAR § 126.1: License Review Policy for Defense Articles and Services Moves From Denial to Case-by-Case

As of October 1, the US State Department’s Directorate of Defense Trade Controls (DDTC) has taken Syria off the International Traffic in Arms Regulations (ITAR) § 126.1 list of countries subject to a license review policy of denial. License applications for exports of defense articles and services to Syria will now be reviewed on a case-by-case basis. 

 The final rule changes three things.

• Denial becomes case-by-case review. Under the previous policy, DDTC denied every application. Now, DDTC will evaluate each proposed transaction on its merits considering, for example, the end user, the end use, and US foreign policy and national security interests.
• Sales proposals are no longer barred outright. Proposals to sell defense articles and services with no export of technical data or defense services are no longer prohibited and do not require a license, but proposals that include technical data still need DDTC authorization.
• The automatic disclosure duty is gone. Exporters no longer have to report Syria-related proposals, exports, reexports, or transfers to DDTC immediately. 

This change was made possible by the prior satisfaction of several statutory prerequisites. We discuss these prerequisites in further detail in our previous alert: Syria Removed From ITAR 126.1 Arms Embargoed Countries: When Will the BIS Hare Catch Up to the DDTC Tortoise?

And the Fox Says…: For defense exporters, Syria has gone from a closed door to a door that may open, one license at a time. However, the race is not over: the Bureau of Industry and Security (BIS) still has to catch up to DDTC and still requires licenses for most items on the Commerce Control List. Until it does, companies should keep checking BIS’ Export Administration Regulations, which govern dual-use and other non-ITAR items, before assuming those items are cleared for Syria too.

Contributors: Kay C. Georgi and Maya S. Cohen

3. Use It or Lose It: CBP Deactivates 5.3 Million IOR Numbers Signaling an Increased Focus on Importer Data

CBP is taking significant efforts to review and clean out its importer registry. Recent reports indicate that CBP deactivated about 5.3 million IOR numbers for prolonged inactivity between June 30 and September 10. As of September 10, only 599 of those numbers had been reactivated. The deactivations came even before CBP began voiding IOR numbers with inaccurate CBP Form 5106 information. Under CSMS No. 69241265, the Automated Commercial Environment (ACE) applies an “Inactive for Entry Purposes” status to any IOR number that has not been used to file an entry in 366 days. An inactive number cannot be used to transmit cargo release or entry summary transactions. Other functions, including acting as consignee, filing drawbacks, securing bonds, and filing ISFs, are not affected.

To reactivate an inactive number, a broker can retransmit complete Form 5106 data through ABI, and an importer without a broker can email a revised Form 5106 to its applicable Center of Excellence and Expertise. This cleanup also comes alongside a separate and more serious initiative. Since September 18, CBP has been immediately voiding IOR numbers when Form 5106 information is inaccurate, incomplete, or does not belong to the IOR as part of CBP’s initial steps to implement the Strengthened Customs Enforcement measures detailed in Executive Order 14411. Inaccurate certifications may also expose the IOR to liability under 18 U.S.C. 1001 and the False Claims Act.

And the Fox Says…: Infrequent importers should confirm their IOR status before their next shipment to avoid potential delays in clearing entries. The recent IOR deactivations signal CBP’s broader effort to verify importer information. All importers should confirm that the information on their Form 5106 is accurate and up to date, including their physical address and current contact information. IOR information on file with CBP is at the forefront of the agency’s focus and is likely to be a target of future enforcement. 

Contributors: Andrew McArthur, Lucas A. Rock, and Antonio J. Rivera  

4. Forced Labor Enforcement: Palm Oil Is Back in the Hot Seat

Could you soon have trouble finding your favorite shampoo or food product on store shelves? On September 29, CBP issued two withhold release orders (WROs) effective immediately on palm oil and its derivative products made by Mitra Aneka Rezeki (MAR) and Hardaya Inti Plantation (HIP) in Indonesia. These companies produce palm fruit as well as palm oil. The WROs, issued under 19 U.S.C. § 1307, authorize CBP to prohibit goods suspected of production using forced labor from entering the country through any US port. For context, palm oil is in everything from chemicals to processed foods, cosmetics, pharmaceuticals, soap, and biodiesel. 

This is not CBP’s first action against palm oil: in 2020 it issued WROs against two Malaysian producers. CBP subsequently modified those WROs, effectively lifting the import prohibitions on those producers’ goods. 

With these two orders, there are now 60 active WROs and eight active findings. CBP has issued eight WROs in fiscal year 2026 alone. Importers whose shipments are detained may export or destroy them, or they may contest the detention and try to show that the goods were not made with forced labor. 

And the Fox Says…: The recent WROs are a further indication that CBP remains active in forced labor enforcement. Importers should ensure that their supplier due diligence programs extend beyond Uyghur Forced Labor Prevention Act compliance. Given the way palm oil derivatives are produced (for example, that palm oil and inputs are often blended from multiple sources), companies need robust traceability and segregation processes in place to ensure no inputs from MAR or HIP enter their supply chain. Importers in industries such as food, automotive, personal care, cleaning, industrial products, and more should map their supply chains to identify and address any exposure to the WROs. The AFS forced labor task force regularly assists clients in assessing risk, preparing documentation, and navigating CBP enforcement actions, including WROs on palm oil. 

Contributors: Andrew McArthur, Lucas A. Rock, and Angela M. Santos

5. Section 232 Tariffs on Pharmaceuticals Causing Headaches: Zero‑Rate Carve‑Outs and Eligible Jurisdictions

On September 29, Section 232 tariffs on patented pharmaceuticals imposed pursuant to Presidential Proclamation 11020 went into effect. On September 23, BIS published a Federal Register notice implementing clause 3(d) of Proclamation 11020. Clause 3(d) allows a 0% Section 232 rate for specialty pharmaceuticals that either come from partner jurisdictions or meet an “urgent U.S. health need.” The notice defines the qualifying products for the first time, names the eligible jurisdictions, and sets out how to apply for an exception. Other pharmaceutical products outside of the defined categories or outside of the potential exceptions described in the Federal Register notice now face tariff rates up to 100%.

Specialty Product Definitions

BIS, consulting with the US Food and Drug Administration and US Department of Agriculture, defined nine categories covering both approved and investigational products: pharmaceuticals and associated ingredients that are designated as orphan, nuclear medicines, plasma‑derived therapies, fertility drugs, cell therapies, gene therapies, antibody drug conjugates, CBRN medical countermeasures, and animal health care products (excluding devices). While definitions have been provided, there remains room for interpretation within the language set forth.

Eligible Jurisdictions and Urgent‑Need Applications 

Pharmaceutical imports within these categories from 19 countries and the European Union can enter the United States without additional Section 232 duties. For all other countries, companies may request approval from Commerce for clause 3(d) treatment based on an urgent US health need. Each request must cover a patented product listed in Annex I of Proclamation 11020, and must include the following:

• Organization information and the contact information of an authorized representative.
• The product’s HTSUS code, name or IND number, active ingredients, and exclusion category.
• The countries of origin and export.
• Each IOR’s name and IOR number.
• The manufacturer’s name and address.
• A rationale explaining why the import meets an urgent US health need.

And the Fox Says…: For specialty products, the gap between the 0% rate and the 100% rate now depends on factors such as whether they fit within the definition of specialty products, whether their country of origin is one of the 19 eligible jurisdictions, or whether they are covered by a successful application to BIS. Importers should assess each product against the new definitions and confirm its country of origin under Customs regulations. The definitions and the jurisdiction list can both be changed by future notice, so these assessments should be revisited regularly.

Contributors: Collin M. Douglas, Katie L. Gustafson, and Lucas A. Rock

6. DOJ Issued New Guidance Document Reprioritizing Trade

On October 1, Assistant Attorney General Colin M. McDonald issued Directive 26-12 to the National Fraud Enforcement Division. The Directive calls for an “aggressive, all-tools approach” to the Division’s health care, government, tax, and trade fraud priorities. Importers should focus on the fourth priority: fraud schemes “involving tariff evasion, importation of goods or services, or forced labor.” 

The Directive instructs prosecutors to give “great weight” to 10 factors when deciding whether to bring charges and when negotiating pleas. Several of these factors fit common customs fraud fact patterns:

• Management knowledge of or involvement in the alleged scheme. 
• Efforts to conceal alleged fraud from agencies or auditors. 
• Conduct that furthers the scheme lasting three years or more. 
• Alleged fraudulent conduct causing $25 million or more in loss. 
• The “exfiltration of American dollars to support foreign adversaries.”

The Directive also centralizes oversight in the Division’s new Corporate Enforcement Section. Prosecutors must report ongoing corporate investigations to the Section within seven days. The Section will also evaluate compliance with the terms of any resolution. In addition, leadership must design whistleblower programs to incentivize individuals to come forward with credible information relating to fraud. All of this comes as the Division uses data analytics to generate leads “at a rapid pace.” 

And the Fox Says…: Multiyear transshipment or country-of-origin schemes, like those alleged in recent FCA settlements, now line up closely with the US Department of Justice’s (DOJ) charging factors. Importers should stress-test their declared country of origin, valuation, HTSUS codes, and forced labor diligence. They should also strengthen internal reporting channels before a whistleblower goes to the government first. With new whistleblower incentives on the way, a company that waits may find that an insider has already gone to the DOJ. The Directive does promise to guard against “overbroad corporate enforcement.” Even so, companies that uncover systemic import issues should consider voluntary self-disclosure under the DOJ’s Corporate Enforcement Policy. 

For further discussion, join us on October 28for our Customs and Trade Fraud Investigations Webinar: Responding to DOJ’s and DHS’s Aggressive and Expanding Enforcement of Customs Fraud Through the False Claims Act.

Contributors: Rebekkah R.N. Stoeckler, Mario A. Torrico, and Jackson David Toof