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Trump Administration Launches Aggressive Tariff Enforcement, Signaling Crackdown on Evasion
President Donald Trump has implemented a sweeping new tariff regime under the International Emergency Economic Powers Act, citing national security concerns. The April 2 announcement establishes a 10 percent baseline tariff on all imports with higher “reciprocal tariffs” targeting approximately 90 countries, effective April 5 and April 9, 2025.
Administration officials have made it clear they intend to aggressively pursue customs fraud cases under this new framework. During a February keynote address at the Federal Bar Association’s annual qui tam conference, Deputy Assistant Attorney General Michael Granston emphasized that “illegal foreign trade practices” would be a major Department of Justice focus over the next four years.
The tariff regime presents significant compliance challenges for corporations, particularly those with supply chains in China and Southeast Asia. Companies may face both criminal charges and civil enforcement for violations, even if they occur through third parties in their supply networks.
Corporate risk stems from several potential compliance pitfalls. Country of origin issues present particular concerns, as goods are considered to originate from where they were manufactured or underwent “substantial transformation.” The financial incentives to route products from high-tariff countries through lower-tariff jurisdictions before U.S. import could tempt actors throughout global supply chains.
Misclassification of goods represents another common evasion tactic, with importers falsely claiming products belong to lower-tariff categories. Similarly, understating the value of imported goods when making customs declarations can reduce tariff obligations.
Companies should note they may be held liable not only for their own employees’ actions but also for those of sourcing agents, suppliers, partners, and customs brokers. This expansive liability landscape necessitates robust compliance programs and thorough third-party due diligence.
U.S. Customs and Border Protection (CBP) leads tariff enforcement efforts but is required to refer potential violations to U.S. Attorney’s Offices or the DOJ. Importantly, CBP has no obligation to notify alleged offenders of these referrals, meaning companies may find themselves under investigation without warning or opportunity to address potential issues.
The Justice Department has multiple enforcement options at its disposal. The False Claims Act can be prosecuted civilly or criminally, with “knowing” violations including not just actual knowledge but also “deliberate ignorance” or “reckless disregard” for truth. Penalties can reach three times the government’s damages plus additional fines in civil cases, while criminal convictions may result in $500,000 fines per false claim and five-year prison sentences.
Wire fraud statutes provide another powerful tool, carrying up to 20-year sentences for schemes involving deception in transnational activities. Making false statements to federal authorities can bring five-year prison terms, while IEEPA violations may result in 20-year sentences and fines up to $1 million.
Smuggling charges, which carry 20-year maximum sentences, can apply when importers mislead CBP about origin, valuation, or classification. Conspiracy charges frequently accompany these cases, particularly in sanctions and export law enforcement.
Recent enforcement actions underscore the administration’s seriousness. On April 18, the DOJ publicly announced its intervention in a qui tam case against Barco Uniforms for allegedly using sham invoices to undervalue imported goods and reduce customs duties. This unusual public announcement signals DOJ’s prioritization of such cases.
In December 2024, prosecutors brought criminal smuggling charges against a Miami businessman who avoided nearly $2 million in tariffs by routing Chinese truck tires through Canada and Malaysia while misrepresenting their origin. Similarly, Akua Mosaics and its president pleaded guilty to conspiracy for falsely labeling Chinese-made tiles as Malaysian products to evade anti-dumping duties, resulting in over $1 million in restitution.
To mitigate risks, companies should assess whether their compliance policies adequately address evolving import regulations. This includes enhanced due diligence of suppliers and manufacturers, vigilance for red flags, and strengthened internal reporting systems. Particular attention should focus on goods historically sourced from high-tariff countries like China.
Non-U.S. entities face potentially heightened scrutiny given the administration’s focus on foreign competition, with expectations that DOJ will take a hard line on violations by international actors.
With the administration viewing its tariff regime as integral to national security, companies should prepare for the possibility that violations could trigger both criminal prosecution and civil litigation targeting both corporate entities and executives.
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12 Comments
This crackdown on tariff violations could have major implications for industries like mining, metals, and energy that rely on global supply chains. Firms will need to devote substantial resources to compliance in order to avoid the threat of False Claims Act lawsuits.
Absolutely, the legal risks are significant. Companies in these sectors should review their procedures and controls to identify and address any potential vulnerabilities.
It’s concerning to see the administration taking such a hardline stance on tariffs and customs enforcement. This could have far-reaching implications, especially for industries with complex global supply chains. Firms will need to be extremely cautious to stay on the right side of the law.
Absolutely, the stakes are high. Companies that run afoul of the new tariff rules could face severe civil and criminal penalties. Proactive compliance will be critical.
The aggressive enforcement approach outlined by the administration is clearly intended to deter tariff evasion. However, the broad scope and complexity of the new rules pose significant challenges for businesses. Careful compliance will be critical to avoid severe penalties.
Agreed, the compliance burden is substantial. Companies must be proactive in auditing their supply chains and implementing robust internal controls to ensure full adherence.
This crackdown on tariff evasion is clearly part of the administration’s broader trade agenda. While the goals may be laudable, the compliance burden it places on businesses is substantial. Careful auditing and rigorous controls will be essential to avoid legal trouble.
Agreed, the compliance challenges stemming from this new tariff regime should not be underestimated. Companies will need to devote significant resources to ensure full adherence.
The DOJ’s focus on pursuing customs fraud cases related to the tariff regime is concerning. This could open the door to a wave of False Claims Act litigation, even for firms that are acting in good faith. Corporations will need to be extremely diligent to stay compliant.
Absolutely, the legal risks are substantial. Companies should review their supply chain controls and procedures to identify and mitigate any potential vulnerabilities.
The new tariff regime under Trump certainly raises compliance risks for companies. It’s critical they thoroughly audit their supply chains to ensure no fraudulent trade practices slip through, even at the third-party level. Vigilance will be key to avoid hefty civil and criminal penalties.
Agreed, the DOJ will likely be aggressive in pursuing False Claims Act cases related to tariff evasion. Companies must have robust internal controls and monitoring in place.