Seven months into President Donald Trump's second administration, a new trade paradigm is emerging that presents challenges for everyone involved in bringing products into the United States. With increasingly complex trade policy levying unprecedented tariff rates—and in light of recent changes that demonstrate the Trump Administration's increased focus on criminal and civil enforcement of trade laws—businesses and individuals will need to be mindful of the increasing potential costs of noncompliance and take steps to reduce the risk of becoming the target of an enforcement action.
On August 7, 2025, a new tranche of tariffs took effect on more than 90 countries, including some of America's largest trading partners. As WilmerHale recently explained, the new International Emergency Economic Powers Act's (IEEPA1 reciprocal tariff rates range between 10% and 41%, with imports from Laos, Myanmar (Burma), Switzerland, and Syria receiving the highest rates (40%, 40%, 39%, and 41%, respectively). Imports from Brazil, targeted under a separate IEEPA order, now face an additional 50% tariff. Sky-high sectoral tariffs have also been imposed in recent months, such as 50% tariffs on aluminum, steel, and copper, and more are expected on products such as semiconductors and pharmaceuticals.2 After IEEPA tariffs rose to 145% on China in April, the United States agreed to drop tariffs to 30% on China to allow for negotiations through August 12; the truce has just been extended for 90 days.
Beyond the initial shock of the new tariff rates, all signs point to a regulatory and enforcement environment in which importers and buyers could now face heightened civil and criminal tariff and customs enforcement. In recent weeks, the Department of Justice (DOJ) has announced that it is forming the Market, Government, and Consumer Fraud (MGCF) Unit to focus on the investigation and prosecution of tariff evasion. The creation of the new MGCF Unit will likely increase DOJ's use of its criminal authority to punish trade-related misconduct—increasing enforcement risks for companies with global supply chains. As WilmerHale previously explained, businesses and individuals also face elevated risk of civil liability through DOJ's stated interest and now expanded use of the False Claims Act (FCA) to pursue trade violations, as well as from qui tam FCA actions brought by private citizens (relators).
Increased tariff enforcement is expected to extend beyond importers. Buyers or others involved in import transactions may also be subject to increased scrutiny, raising the importance of robust, well-documented compliance programs.3
Sharpened Criminal and Civil Customs Enforcement Tools
In tandem with increased tariffs, DOJ is shifting resources to its new MGCF Unit to pursue tariff evasion and fraud. The MGCF Unit will be located within the Fraud Section of DOJ's Criminal Division and will replace the Market Integrity and Market Fraud (MIMF) Unit. The former MIMF Unit focused efforts on investigating procurement and securities fraud. In July, Matthew Galeotti, head of DOJ's Criminal Division, announced that DOJ's Fraud Section would add "significant personnel" from the Consumer Protection Branch to the existing roster of 35 prosecutors within the former MIMF Unit to create the new MGCF Unit.4 The additional resources and sharper focus on trade fraud demonstrate DOJ's intent to move quickly and expansively to bring criminal trade cases.
DOJ derives its authority to bring criminal trade fraud cases under several statutes, including 18 U.S.C. § 542 (entry of goods by means of false statements) and 18 U.S.C. § 545 (smuggling goods into the United States), as well as traditional criminal laws, including 18 U.S.C. § 1001 (statements or entries generally) and 18 U.S.C. § 1343 (wire fraud), among others. Criminal trade fraud may take several forms, including knowingly and willingly (i) disguising country of origin (via transshipping or mislabeling goods), (ii) undervaluing imported goods, and/or (iii) misclassifying goods. Individuals found guilty of violating these statutes may be fined and imprisoned for up to 20 years.
In addition to establishing the newly minted MGCF Unit, DOJ is encouraging the public to support its enforcement agenda. On May 12, DOJ's Criminal Division announced a revised list of priority subject areas as part of its Corporate Whistleblower Awards Pilot Program. Under the pilot program, individuals who provide original, truthful information about criminal misconduct pertaining to one of DOJ's enumerated subject areas that leads to a forfeiture of $1 million or more may be rewarded. Violations related to "trade, tariff, and customs fraud" are now one of DOJ's eight priority areas.5 In fact, a recent memorandum issued by Criminal Division Head Mr. Galeotti listed "trade and customs fraud, including tariff evasion," as the second-highest priority of the Criminal Division's high-impact areas of white-collar crime.6 While trade investigations take time, we expect to see criminal enforcement activity tick up as higher tariffs settle in and more whistleblowers come forward.
Despite DOJ's new emphasis on criminal enforcement of trade fraud, we also expect DOJ to work with U.S. Customs and Border Patrol (CBP) to make extensive use of civil enforcement authorities under Section 592 of the Tariff Act of 1930 (codified at 19 U.S.C. § 1592). Section 592 provides that "no person, by fraud, gross negligence, or negligence . . . may enter, introduce, or attempt to enter or introduce any merchandise into the commerce of the United States" by means of a material false statement or omission, and no person "may aid or abet any other person" in committing such a violation. The U.S. Court of Appeals for the Federal Circuit has upheld CBP's enforcement of Section 592 penalties against persons other than the importer of record,7 meaning all persons involved in import transactions should be mindful of potential customs liability for incorrect entries of foreign merchandise. In fact, difficulties enforcing U.S. trade laws against foreign companies, including Chinese exporters, may lead CBP and DOJ to more aggressively pursue enforcement against U.S.-based companies that are involved in or facilitate tariff evasion—even if not done willfully.
Full Steam Ahead on DOJ False Claims Act (FCA) Civil Enforcement
DOJ is also expected to leverage the FCA as a means of enforcing tariff evasion. As WilmerHale wrote in March, the FCA prohibits individuals and companies from defrauding the federal government through fraudulently claiming payment from the government or by avoiding payment owed to the government (known as a "reverse false claim").8 Under U.S. customs law, importers are required to accurately declare a good's country of origin, classification, and valuation and pay applicable customs duties. The FCA imposes treble damages on persons who fraudulently make false claims, in addition to per-violation civil penalties and potentially whistleblower attorney's fees.9
FCA liability isn't only triggered by DOJ actions; private persons (relators) can also file qui tam suits on the government's behalf. To incentivize relators to bring FCA suits, the FCA provides that relators themselves may receive a portion of the government's recovery.
Together with the Trump Administration's prioritization of combating trade fraud, recent legal developments may open the floodgates for trade enforcement under the FCA. In late June, the U.S. Court of Appeals for the Ninth Circuit issued a long-awaited decision in Island Industries, Inc. v. Sigma Corp., 142 F.4th 1153 (9th Cir. 2025), clarifying that federal district courts hold jurisdiction over FCA suits to recover customs duties notwithstanding the U.S. Court of International Trade's (CIT) exclusive jurisdiction over tariff-related matters. This decision will likely encourage more private actions against tariff evaders.
The case concerned reverse false claims brought by Island Industries, the relator, against its business competitor Sigma, alleging that Sigma submitted false statements to the United States for the purposes of avoiding an obligation to pay antidumping duties owed on imported pipe materials. A key legal issue on appeal to the Ninth Circuit was whether the CIT's exclusive jurisdiction over tariff-related matters precluded other federal courts from exercising subject matter jurisdiction over FCA suits to recover customs duties. The jurisdictional uncertainty stemmed from a 2004 Ninth Circuit decision, United States v. Universal Fruits & Vegetables Corp., 370 F.3d 829, 836-37 (9th Cir. 2004). Under 28 U.S.C. § 1582(3), the CIT "shall have exclusive jurisdiction of any civil action which arises out of an import transaction and which is commenced by the United States."10 In Universal Fruits & Vegetables, the Ninth Circuit held that an "FCA suit filed by the United States against a defendant alleged to have evaded paying customs duties must be brought in the CIT under that jurisdictional provision."11
In Island Industries, the Ninth Circuit has now clarified that Section 1582(3)'s CIT exclusive jurisdiction only applies to civil FCA actions commenced by the United States—not to private cases brought by FCA relators in which the United States declines to intervene.12 As a result, the court affirmed the damages awarded by the jury—more than $24 million under the FCA's treble damages framework.
The Ninth Circuit's decision removes a significant procedural obstacle for relators bringing trade fraud claims against companies under the FCA. Consequently, alongside rising tariffs and increasingly complex customs reporting and recordkeeping requirements, importers will likely face heightened exposure to FCA actions that can carry significant penalties.
Increased Criminal and Civil Enforcement Raises the Stakes for Customs Compliance
Undoubtedly, the speed, complexity, and magnitude of the tariff programs and changes to customs rules that the Trump Administration has enacted in recent months make it difficult to stay abreast of regulatory requirements and incentivize companies to adopt strategies to reduce tariff exposure. In light of the heightened enforcement risks described above, it is more important than ever for companies to follow well-documented, risk-based compliance policies and procedures in order to substantiate customs declarations and mitigate the risk of penalties.
WilmerHale's International Trade team works with clients to support their prospective customs compliance as well as to assist in navigating administrative processes in the event of potential noncompliance. Specifically, our team supports clients with:
- Understanding the business impacts of the Trump Administration's current and planned trade-related actions;
- Evaluating current determinations of key trade data elements (e.g., classification, country of origin, valuation) to assess accuracy and opportunities for duty savings;
- Conducting risk assessments to identify potential import-related risks and offer recommended mitigations;
- Reviewing trade-related policies and procedures to identify and remediate compliance gaps;
- Analyzing supply chains to inform strategic business decisions regarding product sourcing;
- Investigating suspected customs violations and evaluating options for correcting or voluntarily disclosing errors to mitigate potential penalties; and
- Working with CBP in the context of information requests, risk assessments, and audits.
WilmerHale's False Claims Act and White Collar Defense and Investigations teams support clients facing a wide array of enforcement actions and inquiries into their business practices, as well as FCA litigation. Our team has experience supporting clients with:
- Responding to government inquiries, subpoenas, and all forms of investigation into business practices, including FCA and tariff enforcement;
- Defending against FCA litigation brought by qui tam relators and the government, including DOJ and state attorneys general;
- Navigating complex federal procurement law and regulatory structures;
- Conducting internal investigations related to corporate executives, public officials, and corporations in many sectors, including construction, consumer products, energy, technology, manufacturing, pharmaceuticals, and healthcare, among others;
- Preparing corporate witnesses for testimony before government agencies;
- Representing companies and individuals facing civil and criminal liability, including extensive experience representing companies and individuals in matters involving DOJ's Fraud Section; and
- Defending companies and individuals at trial in multi-agency and multi-jurisdictional matters.
Footnotes
1 50 U.S.C. § 1701 et seq.
2 The Trump Administration set a 50% tariff rate on copper effective August 1, 2025. See "Trump Tariff Tracker," Atlantic Council (as of August 9, 2025), https://www.atlanticcouncil.org/programs/geoeconomics-center/trump-tariff-tracker/.
3 Austin Cope, "Tariffs Could 'Open Up the Floodgates' for Customs Fraud," Global Investigations Review (Aug. 8, 2025), https://globalinvestigationsreview.com/just-anti-corruption/article/tariffs-could-open-the-floodgates-customs-fraud (Neena Shenai advised, "Companies should structure their compliance programmes with a clear understanding of supply chains.").
4 Justin Wise, "DOJ Frauds Unit Tasked With Pursuing Evasion of Trump Tariffs," Bloomberg (July 10, 2025), https://news.bloomberglaw.com/white-collar-and-criminal-law/doj-frauds-unit-tasked-with-pursuing-evasion-of-trump-tariffs.
5 Department of Justice Corporate Whistleblower Awards Pilot Program, U.S. Dept. of Justice (May 12, 2025), https://www.justice.gov/criminal/media/1400041/dl?inline.
6 Matthew R. Galeotti, Memorandum re: "Focus, Fairness, and Efficiency in the Fight Against White-Collar Crime," U.S. Dept. of Justice (May 12, 2025), https://www.justice.gov/opa/media/1400141/dl.
7 See United States v. Trek Leather, Inc., 781 F. Supp. 2d 1306, 1312 (Ct. Int'l Trade 2011) ("Any 'person' who engages in the behavior prohibited by 19 U.S.C. § 1592(a) is liable thereunder regardless of whether that 'person' is the importer of record or not."), aff'd, United States v. Trek Leather, Inc., 767 F.3d 1288, 1294 (Fed. Cir. 2014).
8 31 U.S.C. § 3729(a).
9 Id.; see alsoc United States, ex rel. Polansky v. Exec. Health Res., Inc., 599 U.S. 419, 424 (2023) (Kagan, J.) (discussing 31 U.S.C. §§ 3729, 3730).
10 Emphasis added.
11 Island Industries, Inc. v. Sigma Corp., 142 F.4th 1153, 1162 (9th Cir. 2025).
12 The Ninth Circuit cited United States ex rel. Eisenstein v. City of New York, 556 U.S. 928, 933 (2009), in which the court held that "[t]he United States . . . is a party to a privately filed FCA action only if it intervenes." The Ninth Circuit concluded, "[A] relator is not 'the United States' for purposes of interpreting § 1582's grant of exclusive jurisdiction to the CIT." Island Industries, 142 F.4th at 1163.
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