Businesses engaged in international trade are struggling with a wave of uncertainty arising from recent shifts in U.S. tariff policy. Each day’s news cycle is peppered with stories about the Trump administration’s aggressive tariffs and trade enforcement strategies. For companies navigating this volatile environment, the legal risks are escalating quickly. Tariff compliance is no longer just about paperwork—it is now a front line for federal enforcement and criminal liability.
The Return of “America First” Tariff Strategy
During his first term, former President Trump redefined U.S. trade policy with a protectionist approach that heavily emphasized tariffs. Under this strategy, the administration imposed duties on hundreds of billions of dollars’ worth of imports, targeting countries like China through Section 301 tariffs and leveraging Section 232 to impose tariffs on steel and aluminum.
Now, Trump has imposed sweeping new tariffs that would reshape trade compliance risks. Among the most significant are:
- A baseline 10% tariff on all imported goods, regardless of origin.
- Higher tariffs on Chinese goods—poised to escalate up to 145%—framed as a response to perceived economic threats.
- A renewed focus on reducing trade deficits through aggressive reciprocal tariff policy.
While these tariffs have been in flux since they were first announced, it’s safe to assume that we will continue to be in a dynamic, top-down tariff policymaking environment that will dramatically and quickly impact supply chains, compliance obligations, and enforcement exposure.
Compliance Risk in a Politicized Trade Environment
The risks of noncompliance are not merely financial. Enforcement of these newly imposed tariffs will likely emphasize penalties, seizures, and even criminal referrals for companies suspected of evading tariffs or misrepresenting import data.
In the past, the Trump administration significantly increased scrutiny of importers through Customs and Border Protection (CBP) and Homeland Security Investigations (HSI). There’s every indication that a similar, if not more aggressive, enforcement posture will resume. For example, misclassifying goods to benefit from lower duties, obscuring country-of-origin information to avoid punitive tariffs, or undervaluing shipments may be treated not just as customs violations but as fraud—potentially triggering investigations under the False Claims Act or federal wire and mail fraud statutes.
How Businesses Get Caught in the Crosshairs
We’ve seen how businesses—even those acting in good faith—can get swept into government scrutiny. Common issues include:
- HTS Code Manipulation: Changes in duty rates, especially if sudden or sweeping, create pressure on businesses to reclassify goods. However, any misstep here, especially if accompanied by internal discussion about saving costs, can be used as evidence of intent to defraud.
- Origin Confusion: With increased tariffs targeting specific countries, particularly China, some companies may reroute products or alter labeling to reduce exposure. Without careful legal review, these actions can be construed as origin evasion.
- Valuation Tricks: Declaring artificially low prices to reduce tariff liability is a recurring enforcement trigger—especially if related-party transactions or inconsistent documentation are involved.
Preparing for the Next Wave of Enforcement
Whether or not the current tariffs remain in force for the long haul, enforcement intensity is likely to increase soon. Here are key steps companies should take:
- Review Classification and Origin Protocols: Re-evaluate how your goods are classified and labeled. Ensure country-of-origin determinations comply with CBP guidance and rules of origin under applicable trade agreements.
- Conduct Internal Risk Audits: Identify potential vulnerabilities before they trigger enforcement. Review past import records and look for red flags such as inconsistent classifications or unsupported valuation methods.
- Invest in Compliance Infrastructure: Companies should have a designated compliance team and retain outside trade counsel to ensure responsiveness to rapid policy changes.
- Voluntary Disclosures and Remediation: If errors are discovered, proactively disclosing them to CBP can mitigate penalties and demonstrate good faith—a key factor if enforcement escalates.
- Early Legal Intervention: If your company receives a subpoena or is contacted by federal investigators, engage white collar defense counsel immediately. Early action can prevent a civil matter from becoming a criminal case.
Conclusion
Tariff compliance has always required attention to detail, but under the evolving and often aggressive trade policies of the current administration, the stakes are even higher. Companies must prepare for the possibility of fast-moving regulatory changes and renewed enforcement pressure. Failure to comply—or to respond effectively to errors—can expose companies to significant financial penalties and even criminal prosecution.
