"DDP/Dual Clearance"—these four words were once the "magic bullet" for Chinese exporters.
Freight forwarders would promise: "You don't need to worry about anything—we guarantee customs clearance." You simply shipped the goods, paid, and everything else was handled. Low-value goods, cross-border e-commerce small parcels—this model had been running for over a decade with few major incidents.
But in 2026, this entire playbook is being systematically dismantled.
From the U.S. Customs revoking invalid IOR numbers in March, to President Trump signing an executive order in June tightening importer oversight across the board, to Congress advancing the SAFE Act requiring importers to establish a U.S. entity—the gray space for "DDP/Dual Clearance" is being sealed off. Continue down this path, and you're looking at fines, cargo detention, full container destruction, and your business going to zero.
"DDP/Dual Clearance" is a logistics and customs brokerage service model:
Dual Clearance: Export customs clearance in the origin country + import customs clearance in the destination country handled as a single package.
Duty Paid: The logistics provider or freight forwarder acts as the Importer of Record (IOR) and is responsible for filing and paying duties/taxes on the U.S. side.
On the surface, this looks like a "one-stop service." But in practice, many forwarders engage in violations such as using third-party documents for customs declaration, undervaluing goods, and misdeclaring product names in order to maximize profits. These seemingly cost-saving tactics are, in reality, ticking time bombs.
Why is this a time bomb?
Because the forwarder, acting as a "third-party importer," is not the true owner of the goods. U.S. Customs requires that the IOR be the entity that actually owns and purchased the goods, with verifiable information and a clear legal identity. The "DDP/Dual Clearance" model, however, relies on virtual importers, shell companies, and shared bonds provided by the forwarder—which is fundamentally a violation from the very start.
U.S. Customs issued a notice that, effective March 20, it would revoke a batch of problematic IOR numbers. Many customs clearance companies had filed inaccurate information on their IOR's Form 5106—company details, EIN/SSN, and addresses that could not be verified or were duplicate records. Customs stated plainly: "The identity of these importers cannot be verified."
The new rule requires that all new customs declarations must use a genuine, verifiable IOR number. Declarations using revoked or invalid IORs will be rejected, leaving goods unable to clear customs and subject to port detention or return.
What this means: The "shell company IORs" that DDP/Dual Clearance relies on have been uprooted. A large number of forwarders will lose their customs clearance qualifications altogether.
On June 3, Trump signed an executive order instituting comprehensive reforms to U.S. Customs enforcement.
The most devastating change is the two-tiered IOR regulatory framework:
| Type | Definition | Clearance Authority |
|---|---|---|
| U.S. IOR | U.S. citizen/permanent resident, or entity formed under U.S. law | Eligible for informal entry |
| Foreign IOR | Foreign entity that does not meet U.S. IOR definition | Prohibited from using informal entry—formal entry only |
Foreign IORs using formal entry must also meet additional conditions: they must use a C-TPAT certified customs broker, cannot easily use a continuous bond, and face higher asset and bonding requirements.
What this means: The path for Chinese exporters to act as their own IOR through a foreign entity has been blocked. The old practice of "just having any forwarder act as importer" is now effectively illegal.
On March 9, 2026, Senator Bill Cassidy and Representative Jodey Arrington jointly introduced the SAFE Act, which proposes to:
Restrict "non-resident importers" from serving as IOR
Mandate that importers establish a U.S. entity with employees
Require direct payment of duties through a U.S. bank account
Raise the minimum continuous import bond to $100,000
While the bill is still under review, it has already gained support from multiple industry associations. If passed, the import model of "no U.S. entity—just an EIN plus a third-party bond" will come to a definitive end.
This isn't theoretical—it has already happened.
A Zhejiang-based company commissioned a forwarder to export beauty products, declared as "soap." Customs opened the container for inspection and found that the actual contents were 11 different beauty products including lip balm and face masks—seven of which required statutory inspection but had not gone through the proper procedures, and the declared brands had nothing to do with reality. Customs issued a $27,000 fine**. During the detention period, the company also incurred **$10,000 in demurrage charges—bringing the total to nearly $37,000.
The company and the forwarder blamed each other. The company owner said: "You said your 'all-in' service included customs clearance!" The forwarder replied: "You didn't even provide the inspection documents—we're not taking the blame!"
The court cut through their wishful thinking: "Both of you knew that using third-party documents for customs declaration was illegal, but you took the risk to save costs."
Final judgment: both parties bore equal fault—fines and miscellaneous costs split 50/50. The company paid $18,500; the forwarder paid $18,500. That amount was over 20 times more than the costs they had originally tried to save.
The biggest temptation of "DDP/Dual Clearance" is low cost—forwarders under-declare duties and package the "duties" into the service fee, making it look cheap. But the regulatory environment in 2026 has fundamentally changed:
1. FDA Labeling Errors Are the #1 Reason for U.S. Customs Holds
The FDA imposes extremely stringent requirements on food labels—the "Big Nine" allergens, the 2016 nutrition facts panel format, net quantity declarations (in both U.S. customary and metric units), manufacturer/distributor name and address—any single missing or incorrect item can result in cargo detention or refusal of entry.
Under the DDP/Dual Clearance model, the forwarder only cares about "getting it through customs"—they do not check whether your label meets FDA requirements. If something goes wrong, you bear all the losses.
2. Undervaluation Faces a Minimum 50% Penalty
The new executive order stipulates that standard fines must not be less than 50% of the assessed amount, limiting CBP's discretion in reducing penalty assessments. The old game of "undervalue by half and pay half the duties"—if caught, you now face a penalty of at least 50%, plus back duties. The total cost ends up being higher.
3. The "5H Inspection Storm": Thousands of Containers Detained
Since 2026, U.S. Customs has launched the "5H Inspection Storm," adopting a "document review first, physical inspection second" model. Upon arrival, the system subjects all declaration documents to strict cross-verification—commercial invoices, packing lists, HS codes, declared values, IOR bonds, EIN, and qualification certificates. Many containers have been detained due to fraudulent bonds, undervaluation, vague product descriptions, and "shell" importers.
Industry feedback indicates that thousands of Chinese containers have already been detained, with some forced to return. Detention periods range from days to months, racking up massive demurrage and storage fees.
1. Immediately Terminate Any "DDP/Dual Clearance" Arrangements
If you are still using a forwarder's "all-in" clearance service for food or food packaging shipments, stop immediately. After March 2026, problematic IORs have been revoked; after June, foreign IORs are prohibited from using informal entry. Continuing with this model will result in cargo being refused upon arrival.
2. Establish a Genuine U.S. Importer Entity
For food imports into the U.S., the importer must complete FDA facility registration (for food manufacturing/processing/packing/warehousing facilities) and designate a U.S. agent. For food contact materials (packaging), FDA facility registration is typically not required, but you must ensure material compliance with 21 CFR requirements.
Long-term: Consider establishing a U.S. entity with employees—this aligns with the SAFE Act trend and would also allow you to use the "U.S. IOR" pathway to access informal entry.
3. Build an FDA Compliance System
Food labels must meet FDA requirements—"Big Nine" allergen declarations, the 2016 nutrition facts panel format, net quantity declarations, manufacturer/distributor information, etc. Food contact materials must confirm compliance with the positive list under 21 CFR Parts 174–178.
Labeling errors and non-compliant materials are the #1 reason for U.S. Customs holds. Incomplete compliance documentation is more dangerous than DDP/Dual Clearance.
4. Choose a Reputable Customs Broker
The executive order requires foreign IORs to use C-TPAT certified customs brokers. Select a compliant freight forwarder with experience in FDA-regulated food-grade cargo clearance to assist with FDA registration, Prior Notice submission, label review, and the full process.
The era of "DDP/Dual Clearance" is ending. The gray-channel path that once relied on "shell company IOR + undervaluation + misdeclaration" has been shattered by three major blows from U.S. Customs in 2026.
Those who continue down this path face not just fines—cargo detention, full container destruction, and business collapse could all become reality.
Compliance costs may be high—but the cost of non-compliance is far higher. It's not too late to change course. Do it now.
