In the current importing landscape where heightened tariffs are the norm, not only is more money at stake, but also more risk. Since the beginning of the second Trump Administration, the Government has made combating trade fraud a priority, reorganizing and enhancing its resources to target tariff evasion and import smuggling and relying more heavily on alternative civil and criminal legal authority for enforcement.
Trade Law Enforcement Authority
Duties are calculated based on a variety of factors, including tariff classification, dutiable value, and country of origin. When bringing goods into the United States, an importer must declare this information to U.S. Customs and Border Protection (CBP), in part to allow CBP properly to assess duties on imported goods. False declarations can result in the assessment of a lower amount of duty than is actually owed and deprive the Government of revenue.
Traditionally, such activity has been dealt with under the provisions of Section 592 of the Tariff Act of 1930, 19 U.S.C. § 1592, paragraph (a)(1)(A) of which states that "no person, by fraud, gross negligence, or negligence" may "enter, introduce, or attempt to enter or introduce any merchandise" into the United States by means of any material false statements or omissions. Under the statute, an offending party may face civil penalties up to the domestic value of the imported goods. CBP directs the investigation and penalty proceedings and issues administrative notices that give the alleged offender the opportunity to mitigate and to satisfy penalty demands before CBP files an enforcement action in court.
But the Government has other tools in its toolkit for combating fraud against the United States, one of which is the False Claims Act (FCA). The relevant statute, 31 U.S.C. § 3729(a)(1)(G)—known as the "reverse false claims" provision—penalizes any "person" who "knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government," in an amount equal to three times the damages, plus a penalty of up to $28,619 per claim. A key feature of the FCA is its "qui tam" provision, under which private parties, known legally as "relators" and familiarly as "whistleblowers," may bring cases on behalf of the Government and receive up to 30% of the total recovery, which provides a strong economic incentive for employees and others to alert the Government to a company's customs evasion.
While the FCA is used to target all forms of fraud, including customs fraud, the Department of Justice (DOJ) has historically deferred to CBP's administrative remedies under Section 592. Infrequently, DOJ has also pursued prosecutions of trade fraudsters under criminal statutes such as 18 U.S.C. § 542, which forbids the entry of goods by means of false statements, or § 545, which imposes a prison sentence of up to 20 years for smuggling prohibited goods.
DOJ Reorganization and Prioritization
In 2025, however, DOJ signaled a more aggressive posture in enforcing tariff evasion under all available authorities and implemented organizational changes to put more teeth in the enforcement program. Most recently, on August 29, DOJ and the Department of Homeland Security (DHS) announced the creation of a cross-agency Trade Fraud Task Force to target tariff and duty evasion. This Task Force, which will "leverage expertise from both the Civil and Criminal Divisions" alongside both CBP and DHS's Homeland Security Investigations (HSI), is charged with "pursuing those who violate customs laws through duty and penalty collection actions under the Tariff Act of 1930, actions under the False Claims Act, and, wherever appropriate, parallel criminal prosecutions, penalties, and seizures under Title 18's trade fraud and conspiracy provisions."
DOJ's announcement builds upon months of public statements by DOJ officials about shifting resources and focus to enforce tariffs. As early as February 20, 2025, then-Deputy Assistant Attorney General Michael Granston, in a keynote address to the Federal Bar Association, signaled the shift of DOJ enforcement activity and resources under the FCA to "illegal foreign trade practices," including schemes to evade customs duties, noting: "You can expect the Department to continue to use the False Claims Act to enforce these trade laws." Then-Director of the Civil Division's Fraud Section, Jamie Ann Yavelberg, characterized tariff evasion by way of misrepresenting country of origin, value, or quantity as a "key area" of FCA enforcement. A May 12, 2025, memorandum on white-collar crime from the Criminal Division's Acting Assistant Attorney General Matthew Galeotti designated trade and customs fraud, including tariff evasion, as one of 10 "high-impact areas," and revised its Corporate Whistleblowers Awards Pilot Program to include "trade, tariff, and customs fraud by corporations" as a priority subject area. On July 10, it was reported that the Criminal Division's Fraud Section's Market Integrity and Major Frauds Unit would add resources from the Civil Division's Consumer Protection Branch to form a new Market, Government, and Consumer Fraud (MGCF) Unit focusing on tariff evasion, among other areas.
This shift and repurposing of prosecutorial resources is no surprise. The Administration's substantially enhanced tariff regimes have led to a very different landscape for importers facing dramatically increased duties and levies. It also provides a significant new revenue stream for the U.S. Government. This is a perfect storm for potential fraud and reason enough for importers to review their own import policies and procedures.
How to Protect Your Company and Yourself
In light of increased investigative and enforcement activities, companies should prioritize customs compliance. First, any importer should consider conducting a thorough self-audit and voluntarily disclosing any past unlawful behavior. Section 592, the FCA, and DOJ's Criminal Division have disclosure provisions that may allow a company to reduce any penalty by reporting and remediating their errors before knowing of any governmental investigation. Even if nothing unlawful is uncovered, an audit will give the company the opportunity to strengthen (or develop) its customs compliance program.
Second, importers should be wary of schemes that promise to reduce duty liability with little detail, including using delivered duty paid (DDP) terms. As tariffs increase, mitigation strategies become more attractive as compliance becomes more complex. Shifting sourcing to change country of origin, instituting a first sale program to reduce value, and tariff engineering to change classification all can be lawful ways to reduce liability. Misstatements of fact and transshipment are not. Always consult customs counsel before instituting a new approach and scrutinize proposals that seem too good to be true.
Third, be sure promptly to elevate any communications from CBP, DOJ, or other agencies regarding import activity to senior company officials and legal counsel. Failure to respond timely, accurately, and completely to simple requests for information can unnecessarily escalate a mere mistake into a full-blown investigation or signal lack of cooperation with authorities.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
