The United States Department of Justice (DOJ) has deployed its Market Integrity and Major Frauds Unit to target tariff evasion, a clear sign of the escalation of trade enforcement. The Criminal Division’s specialized unit, known for prosecuting complex procurement fraud and market manipulation cases, is obtaining new resources and now turning its attention to companies dodging tariffs. This new development comes on the heels of DOJ’s prior announcement that it will prioritize tariff enforcement under the False Claims Act (FCA). Historically, U.S. Customs and Border Protection (CBP) has relied heavily on its administrative remedies to enforce the customs and tariff laws. As we explain below, that is likely to change, as DOJ and the Department of Homeland Security (DHS) are expected to aggressively pursue civil remedies against tariff evasion through the FCA and to use traditional criminal statutes to investigate egregious trade violations.
Key Takeaways
- DOJ & DHS will strenuously enforce tariff and customs avoidance. As part of the administration’s focus on tariffs, DOJ announced that enforcement against illegal foreign trade practices would be a priority going forward. DOJ has already announced that it intends to use the FCA to enforce tariff and customs avoidance schemes.
- Specialized fraud unit pivots to trade enforcement. DOJ’s Market Integrity and Major Frauds Unit is obtaining new resources and shifting its focus to target cases involving long-running frauds, senior executives, and large volumes of alleged losses from unlawful tariff schemes. We expect DOJ to devote increased resources to pursue both civil and criminal charges against companies and individuals that engage in trade violations.
DOJ & DHS Enforcement of Tariffs and Customs Avoidance
DOJ and DHS will no doubt play a key role in enforcing the Trump administration’s new tariffs and will use a combination of administrative remedies, civil remedies through the FCA, and criminal statutes to investigate and charge companies and individuals for alleged trade violations. DOJ is focusing enforcement on three primary areas of trade violations that have emerged as the most common and financially damaging evasion schemes:
- Misrepresenting Country of Origin involves falsifying the stated origin of goods on customs entry documents, invoices, or product labels to minimize tariffs. This often occurs through transshipment, where companies route products through lower-tariff countries for minor repackaging or processing before final export to the United States, taking advantage of preferential rates while evading duties on the true country of origin.
- Misclassification occurs when companies deliberately categorize goods incorrectly under the Harmonized Tariff Schedule to pay lower duties. The HTS sets forth applicable tariffs based on product categories, creating opportunities for manipulation through deliberate mislabeling of products to qualify for lower-duty classifications.
- Undervaluation schemes involve submitting false invoices that undervalue imported goods to reduce tariff obligations. These schemes often involve systematic underreporting of product values by substantial percentages, with some recent enforcement actions targeting companies that undervalued imports by 70% or more.
Criminal Division Unit Targets High-Value, Multi-Executive Schemes
On July 10, 2025, Acting Assistant Attorney General of the Criminal Division Matthew Galeotti announced that the Market Integrity and Major Frauds (MIMF) unit will be renamed and will expand its focus to specifically target long-running frauds involving senior executives and large volumes of alleged losses from unlawful tariff evasion schemes. The MIMF Unit, which currently employs roughly 35 Criminal Division lawyers, will add “significant personnel” from the Civil Division’s Consumer Protection Branch. The expanded group will be renamed the “Market, Government, Consumer Fraud Unit” and will focus on trade violations and white-collar crimes.
Companies now face potential prosecution under multiple federal statutes carrying serious penalties. Charges can include smuggling under 18 U.S.C. § 545, entry by false statement under 18 U.S.C. § 542, or general false statements under 18 U.S.C. § 1001. Most significantly, tariff avoidance under President Trump’s IEEPA orders can carry up to 20 years in prison.
There are still limitations on enforcement, particularly with foreign entities operating outside U.S. jurisdiction. Prosecutors face significant challenges pursuing Chinese companies that may facilitate evasion schemes, as international cooperation is often limited. This reality has led the Criminal Division to focus primarily on U.S. companies and executives that participate in or enable tariff evasion operations.
False Claims Act Enforcement Accelerates Alongside Criminal Cases
While the Criminal Division targets the most egregious violators, DOJ continues to leverage the False Claims Act as its primary civil weapon against tariff evasion. Over the last decade, the FCA has become DOJ’s go-to tool for targeting fraud against government agencies, with collections exceeding $2.9 billion in Fiscal Year 2024 alone—representing a 38% increase over the prior year.
The FCA enables the government to recover tariffs and customs duties that should have been paid under a “reverse false claim” theory. In 2009, the FCA was amended to expand liability to parties that “knowingly and improperly avoid or decrease an obligation to pay or transmit money or property to the government,” with Congress specifically referencing customs duties in an accompanying Senate Report.
Best Practices for Compliance
With DOJ deploying its MIMF Unit alongside aggressive FCA enforcement, companies importing goods face unprecedented criminal and civil liability risks. The shift from administrative penalties to potential federal prosecution means compliance programs must now withstand scrutiny from specialized white-collar crime prosecutors targeting senior executives and systematic evasion schemes. Companies should immediately take the following actions:
- Evaluate current compliance programs to ensure they meet regulatory expectations, including reviewing contractual relationships with supply chain participants and requiring outside parties to comply with company policies.
- Implement annual training courses, as trade compliance requirements change rapidly. Training new employees and providing refresher courses are essential.
- Strengthen internal reporting systems to provide whistleblowers opportunities for internal disclosure before reporting to DOJ, taking advantage of voluntary disclosure policies.
- Consider early legal counsel involvement in compliance reviews to preserve privilege protections, given the shift from administrative to criminal enforcement with white-collar crime expertise.
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