DOJ Intensifies Trade Fraud Enforcement Under Trump’s America First Policy

The Department of Justice is significantly expanding its enforcement efforts against customs and tariff violations as the Trump Administration’s America First trade policy continues to take shape. A newly formed interagency Trade Fraud Task Force, combining resources from the DOJ and Department of Homeland Security, signals a substantial shift toward aggressive prosecution of trade violations through both criminal and civil channels.

The DOJ’s Criminal Division has rebranded one of its units as the Market, Government, and Consumer Fraud Unit, with a specific focus on pursuing criminal charges against companies and individuals attempting to evade U.S. tariffs. This unit’s prioritization of tariff evasion reflects the administration’s broader emphasis on trade enforcement.

Simultaneously, the DOJ is ramping up civil enforcement through the False Claims Act (FCA), which can result in treble damages and substantial civil penalties. This expanded approach supplements the department’s long-standing use of the Tariff Act of 1930, specifically 19 U.S.C. § 1592, which addresses violations related to merchandise entering the United States.

“Companies should expect customs fraud enforcement, both criminal and civil, to remain a top-line DOJ priority in the coming years regardless of whether the Administration’s tariffs remain in place,” according to legal experts familiar with the matter. The DOJ appears to be seeking early enforcement targets to establish precedents and deter future violations.

The Trump Administration’s implementation of country-specific reciprocal tariffs has created a complex duty structure, with levies varying from 10% to 41% depending on the trading partner. These tariffs are sometimes cumulative with other product-specific duties, creating a significant financial incentive for importers to misrepresent a product’s country of origin or classification to avoid higher rates.

For example, aluminum and steel from most countries now face a 50% tariff, while the same products from the United Kingdom are subject to a lower 25% rate. This variation incentivizes deception that the DOJ aims to combat.

The department’s criminal enforcement toolkit includes multiple statutes that address “trade fraud” – misrepresentations about either the origin or nature of imported products made to evade duties and tariffs. While proving such fraud has historically been challenging, recent statements from DOJ leadership suggest a more aggressive posture going forward.

In May, Acting Assistant Attorney General Matthew Galeotti issued a memorandum listing trade and customs fraud among the administration’s top white-collar enforcement priorities. The Criminal Division has also expanded its Corporate Whistleblower Awards Pilot Program to cover information regarding trade fraud, incentivizing internal employees to report potential violations.

Recent prosecutions demonstrate the DOJ’s willingness to pursue these cases. Last year, prosecutors in Florida secured a guilty plea from a defendant involved in smuggling merchandise into the U.S. using fraudulent invoices. In another case, a couple received 57-month prison sentences for illegally importing and selling tens of millions in plywood products in violation of customs laws.

The DOJ’s civil enforcement through the False Claims Act provides another powerful avenue for prosecution. The FCA imposes treble damages and significant penalties for each violation, potentially matching or exceeding the unpaid duties themselves. The statute requires only that defendants acted recklessly or indifferently regarding obligations owed to the government – a lower standard than criminal prosecution requires.

“The FCA is extremely broad: it makes liable any defendant that ’causes’ the evasion or concealment of an obligation to the government,” notes a trade attorney. “When it comes to trade violations, that breadth can lead to the liability of a company within the supply chain that was not responsible for the payment of tariffs but that was involved in a scheme to evade them.”

The past decade has witnessed numerous seven and eight-figure FCA settlements involving alleged trade violations across various industries, from military equipment and apparel to dietary supplements and furniture. Common violations include product misclassification, undervaluation, false statements about a product’s origin, and “Buy America” requirement violations.

Companies concerned about potential enforcement actions should implement robust compliance programs specifically addressing customs and tariff practices. This includes conducting appropriate due diligence on supply chain partners, maintaining thorough documentation of communications with Customs and Border Protection, and potentially seeking classification rulings from the Department of Commerce.

Given the rapidly evolving enforcement landscape, importers should carefully evaluate their trade compliance systems and consider whether voluntary disclosure might be appropriate if violations are discovered. With both criminal and civil enforcement mechanisms now coordinated under the Trade Fraud Task Force, the stakes for non-compliance have never been higher.