DOJ Intensifies Tariff Enforcement Through False Claims Act

The Department of Justice has significantly ramped up its efforts to combat tariff evasion and customs fraud, using the False Claims Act (FCA) as a primary enforcement tool. This shift aligns with the second Trump administration’s aggressive stance on trade policy and its commitment to fight “waste, fraud, and abuse” in the customs arena.

Recent months have witnessed a surge in customs enforcement actions involving the FCA across the United States. Since March 2025, the DOJ has announced three major settlements totaling nearly $20 million. MGI International LLC subsidiaries agreed to pay $6.8 million for allegedly misidentifying imported resins’ country of origin. Grosfillex Inc., an American arm of a French company, settled for $4.9 million after allegedly mischaracterizing aluminum furniture parts as “kits” to evade antidumping duties. Evolutions Flooring Inc. paid $8.1 million to resolve allegations of incorrectly identifying manufacturer identity and country of origin for imported wood flooring.

These cases frequently originate from whistleblower complaints filed under the FCA’s qui tam provisions, which permit individuals with knowledge of potential violations to bring claims on behalf of the United States in exchange for a portion of any recovery.

The DOJ is taking a more direct approach to these cases, recently announcing its intervention in customs-evasion lawsuits against Barco Uniforms Inc. and its operators, and against Global Office Furniture, LLC and its owner. This marks a departure from the government’s historical tendency to refrain from joining such cases or only intervening for settlement purposes.

In another significant development, the 9th Circuit Court of Appeals upheld a $26 million jury verdict in Island Industries Inc. v. Sigma Corp., a case involving evasion of antidumping duties on Chinese goods. The court determined that Sigma’s failure to implement basic compliance measures constituted sufficient evidence of FCA violations with the required level of intent—whether through actual knowledge, deliberate ignorance, or reckless disregard.

The DOJ is reconfiguring its internal structure to prioritize customs enforcement. The Civil Division, responsible for FCA investigations and litigation, is now working more closely with the Criminal Division’s Fraud Section. The Market Integrity and Major Frauds Unit is being consolidated with attorneys from the Consumer Protection Branch to form a new Market, Government, and Consumer Fraud Unit (MGCF), creating a multidisciplinary team focused on administration priorities, including customs fraud and tariff evasion.

“This structural reorganization represents a strategic alignment of resources to combat trade violations more effectively,” explained a Washington-based trade attorney who requested anonymity to speak freely about government policy. “The coordination between civil and criminal divisions significantly increases the government’s enforcement capabilities.”

The DOJ continues to encourage whistleblower tips and self-disclosure of potential violations. The revised Corporate Whistleblower Awards Pilot Program now explicitly includes “trade, tariff, and customs fraud” among areas eligible for financial awards. When announcing the MGI resolution, DOJ emphasized that “when companies self-disclose misconduct, cooperate fully with the government’s investigation, and take meaningful corrective action, they can receive credit.”

However, self-disclosure presents its own complexities, as the standards for “full” cooperation and “meaningful” corrective action remain subjective and open to interpretation.

For businesses navigating this evolving enforcement landscape, experts recommend several proactive measures: closely monitoring the changing tariff environment, regularly assessing compliance risks, establishing robust customs compliance mechanisms, and being prepared to respond effectively to investigative inquiries.

The increasing use of the False Claims Act in customs enforcement represents a powerful tool in the administration’s trade policy arsenal. With significant financial penalties at stake and the potential for both civil and criminal liability, businesses operating in the international trade space face heightened scrutiny and enforcement risks in this new regulatory environment.