The shifting tariff landscape in 2025 has incentivized businesses to reexamine their import practices and identify any available options to reduce their tariff exposure and liability. While this is a useful legal exercise for many businesses, the federal government is aware that some businesses may engage in unlawful practices to reduce their tariffs on imports, and they are actively shifting personnel for more aggressive enforcement activities.
In their latest move, the Department of Justice (DOJ) is prioritizing the aggressive enforcement of tariffs and trade policy by directing the Market Integrity and Major Frauds Unit of the Criminal Division to pursue companies and individuals vigorously. With this new mandate, the DOJ is expanding the unit by shifting attorneys previously assigned to the Consumer Protection Branch and giving it a new name: the Market, Government, and Consumer Fraud Unit within the Criminal Division’s Fraud Section. Executives and corporations who violate tariff laws will now face the risk of significant prison sentences and increased fines for criminal charges such as smuggling (18 U.S.C. § 545), entry by false statement (18 U.S.C. § 542), and general false statements (18 U.S.C. § 1001).
New enforcement of tariffs and trade policy under white-collar criminal laws builds on previous directives to aggressively implement parts of the Trump administration’s agenda through the use of the False Claims Act, expanded whistleblower protections, and the existing authority of the Department of Homeland Security’s Customs and Border Protection (CBP) and Homeland Security Investigations units.
Enforcement resources will target a variety of tactics that companies and individuals use to avoid the costs of tariffs, including the following:
• Misclassification: Classifying a good for import can be challenging even for seasoned importers, and classification affects the regular duty rate or whether the good is subject to tariffs. For importers that are reclassifying goods in a way that reduces the overall tariff impact on the product and resulting underpayment, a potential misclassification will trigger the CBP’s skepticism and may result in an investigation. If misclassification results from intentional misrepresentation, even ordinary CBP penalties could be as much as eight times the value of the underpayment.
• Undervaluation: As is the case with classification, valuing a product for import can be confusing, but in CBP’s view, there is only one right answer. Liability can result without careful adherence to the valuation rules, irrespective of whether the undervaluation is intentional. Primarily, however, the CBP and DOJ will be looking for distortions in the reported value of the good—particularly on products that have been imported at a higher price prior to the imposition of tariffs. Companies making legitimate adjustments will face an uphill battle proving their good faith and accurate application of the valuation rules.
• Transshipment: Particularly because recent tariffs have targeted certain countries disproportionally, some businesses have attempted to reroute goods through other countries to misrepresent the country of origin of the product. While the good is a product of inputs and assembly in multiple countries, CBP uses a “last substantial transformation” test to determine the country of origin of the product, the result of which may not always be obvious to the importer. Thus, even without intentional evasion, the importer of record may be at risk of investigation if the country of origin is not clear from the supporting documents submitted with the entry packet.
• Structured shipments: Breaking up large shipments into smaller ones that avoid scrutiny is a practice that some businesses may have employed in the past, but that now entails greater risk. While some shipment restructuring to change the nature of the import itself is legal and may result in greater tariff and duty efficiencies, importers should be aware of increased scrutiny of changes that may be designed to conceal the true nature, value, or volume of imported goods.
• Duty drawback abuse: Importers are often able to claim refunds for paid duties when the good is re-exported. Abuse of these refunds leading to liability can occur if refunds are claimed fraudulently. Additionally, abuse might arise through a loose compliance program or outdated technology that leads to duplicate or otherwise inaccurate claims for refunds. Finally, duty drawback is not available for all new tariff schemes, so undue claims may result in a penalty if not corrected in a timely manner.
Companies and senior executives engaged in fraud schemes that are expansive in terms of length or volume will be top targets for criminal prosecutions. Criminal enforcement by the DOJ’s new Market, Government, and Consumer Fraud Unit will supplement preexisting civil enforcement and regulatory oversight. Additionally, civil enforcement under statutes such as the False Claims Act can be initiated by either the government or a whistleblower seeking a reward, and result in large and potentially catastrophic penalties. These criminal and civil risks are compounded by the current turbulent nature of tariffs and trade law.
Accelerating risks in this volatile environment requires companies and individuals to take smart and well-reasoned action to ensure imports are handled with care. Robust compliance regimes, review or audits of current classifications and determinations by trusted advisors, oversight of customs broker submissions, internal reviews, and management and navigation away from potential violations should be a key focus for corporations and executives who face exposure.
