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False Claims Act Enforcement Intensifies Under New Trade Tariff Expansion
The Trump administration’s aggressive trade agenda, marked by frequent new tariffs and duties, has created a heightened environment for False Claims Act (FCA) enforcement related to customs violations. As the government implements additional trade barriers, companies face increasing scrutiny and potential whistleblower lawsuits over tariff compliance issues.
The False Claims Act serves as the government’s primary tool for combating fraud against federal programs. The law imposes liability on entities that knowingly submit false claims to the government or deliberately avoid financial obligations to federal agencies. In the customs context, this includes importers who evade duties by undervaluing goods, misclassifying products under the Harmonized Tariff Schedule, or falsely declaring country of origin.
Significantly, the FCA doesn’t require actual knowledge of violations to establish liability. Companies acting with “deliberate ignorance” or “reckless disregard” of customs requirements can face penalties. These penalties are substantial – treble damages plus inflation-adjusted fines currently ranging from $14,308 to $28,619 per violation.
What makes the FCA particularly powerful are its unique “qui tam” provisions enabling private enforcement. These allow whistleblowers, known as “relators,” to file lawsuits on behalf of the United States alleging FCA violations. The Department of Justice (DOJ) investigates these claims while the case remains under seal, and can choose to intervene or allow the relator to proceed independently.
“The whistleblower incentives are substantial,” noted one legal expert familiar with customs enforcement. Relators receive 15-25% of recoveries when DOJ intervenes, and 25-30% when pursuing cases independently. They also receive attorney fee reimbursements if successful.
The whistleblower mechanism has proven remarkably effective. In 2024, the DOJ opened 1,402 new FCA matters, with 979 initiated by qui tam complaints – an all-time record exceeding the previous high of 757 filings in 2013.
Since January 2025, the Trump administration has prioritized aggressive trade policies. Emergency tariffs have been imposed on Canada, Mexico, and China. In February, executive orders expanded national security tariffs on steel, aluminum, and derivative products. March brought authorization for tariffs on countries importing Venezuelan oil, and more recently, national security tariffs were announced for foreign automobiles and parts.
Investigations are currently pending on copper and lumber imports, while importers anxiously await April 2 – dubbed “Liberation Day” by President Trump – when undefined “reciprocal tariffs” are expected to be implemented. The cumulative effect of these layered tariffs creates stronger incentives for evasion.
DOJ officials have clearly signaled aggressive enforcement intentions. Deputy Assistant Attorney General Michael Granston declared in a February 2025 speech that the department would continue “aggressively” enforcing FCA violations, specifically identifying tariffs and customs enforcement as areas where the FCA serves as a “powerful” enforcement tool.
Previous administrations have already pursued significant FCA enforcement actions for customs violations. One of the largest cases resulted in a $45 million settlement with an importer who misrepresented countries of origin to evade antidumping and countervailing duties. The competitor who filed as relator received nearly $7.9 million.
Recent enforcement examples, all triggered by qui tam lawsuits, include:
- A wood flooring importer paying $8.1 million in March 2025 for evading duties by misrepresenting Chinese goods’ origin
- A womenswear company settling for $7.7 million in August 2024 for underpaying duties on imported apparel
- Two importers of wiring products paying $10.6 million in August 2024 for understating Chinese imports’ value
- A vitamin importer settling for $22.8 million in January 2023 for product misclassification
- An engineering company paying $22.2 million in September 2020 for falsifying classification and valuation of construction materials
Companies can mitigate FCA risk by reviewing high-duty import transactions, focusing on country-of-origin compliance, accurate valuation reporting, proper product classification, and analyzing whether products fall under specific antidumping or countervailing duty orders.
Additional protective measures include appointing dedicated trade compliance officers, implementing written compliance policies, operating internal reporting hotlines, protecting whistleblowers from retaliation, and thoroughly investigating compliance concerns.
As trade barriers continue expanding under the current administration, companies importing goods must ensure robust internal controls and compliance systems to navigate increasingly complex customs requirements and avoid potentially devastating False Claims Act liability.
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11 Comments
This is an important development for the mining and energy sectors, which rely heavily on global supply chains and international trade. Careful compliance with customs requirements will be essential to avoid the substantial penalties under the False Claims Act.
This seems like an important development for companies involved in international trade. Increased enforcement of customs and trade violations under the False Claims Act could have significant financial and reputational implications for importers not strictly adhering to tariff and trade requirements.
Companies will need to carefully review their procedures and practices to ensure full compliance. Ignorance or reckless disregard won’t be an excuse under the FCA.
As someone invested in several mining and metals companies, I’ll be watching this issue closely. Increased customs enforcement could impact the bottom line for firms found in violation, especially in the current volatile trade environment.
Proactive compliance will be critical for these companies to avoid FCA liabilities. Investors should look for signs that firms are taking steps to shore up their trade practices.
Curious to see how this enforcement push impacts the uranium and lithium industries, which have faced disruptions from trade tensions in recent years. Companies in these sectors will need to be vigilant about tariff compliance to avoid False Claims Act troubles.
With the high value of these critical minerals, the stakes are even higher for avoiding customs violations.
With the current administration’s protectionist trade policies, I’m not surprised to see a crackdown on customs violations. The potential for steep penalties under the False Claims Act is a strong incentive for importers to tighten up their processes.
It will be interesting to see how this enforcement push plays out and whether it leads to a rise in whistleblower lawsuits related to tariff evasion.
The False Claims Act seems like a powerful tool for the government to crack down on trade-related fraud. I wonder if this will lead to more whistleblower lawsuits being filed against mining and energy companies over customs issues.
Companies will need to ensure robust internal controls and auditing to identify and address any potential compliance gaps.