Given the Trump Administration’s unprecedented reliance on tariffs as a foreign policy tool and a means to protect and foster U.S. industry, the U.S. Department of Justice (DOJ) is rapidly shifting resources and enforcement priorities toward trade fraud and tariff evasion—underscoring a growing readiness to pursue criminal cases. This marks a sharp pivot from its traditional criminal enforcement priorities, with import fraud and tariff evasion—in all its forms—now squarely in DOJ’s sights. The purpose behind this DOJ enforcement priority is to enforce the tariff mandates that the Trump Administration has imposed (e.g., IEEPA fentanyl/reciprocal, copper, steel, aluminum, and antidumping and countervailing duties).
- In May, leadership of DOJ’s Criminal Division identified “trade and customs fraud, including tariff evasion” as its second most important white collar crime enforcement priority.
- DOJ also expanded the Criminal Division’s Corporate Whistleblower Awards Pilot Program to cover trade, customs and tariff violations. As discussed in our prior client alert, this program incentivizes company employees—and even market competitors—to report tariff and trade violations to the DOJ.
- In July, the acting head of DOJ’s Criminal Division told Bloomberg Law that DOJ is transferring a significant number of prosecutors from the Civil Division’s Consumer Protection Branch to the Criminal Division’s Fraud Section. Their new mandate: to investigate and prosecute trade fraud and tariff evasion.
- This shift in focus is bolstered by the One Big Beautiful Bill (OBBB) Act, which increases funding for both the U.S. Customs and Border Protection (CBP) and DOJ.
Key Takeaway
The message from DOJ is clear: criminal tariff enforcement is at the top of the agenda, and it is dedicating both the funding and the prosecutors to pursue it. Companies should respond by immediately gauging their potential exposure and enhancing import controls compliance programs.
How DOJ Will Likely Charge Criminal Tariff Evasion
Historically, tariff enforcement has more often occurred through civil mechanisms. It has traditionally been led by the CBP pursuant to 19 U.S.C. § 1952, which allows the government to impose civil penalties for customs violations, ranging from multiples of the underpaid duties to full domestic value of the merchandise.
DOJ has also been increasingly relying on the False Claims Act (FCA), 31 U.S.C. § 3729, to enforce tariffs and customs-related violations. The so-called “reverse false claims” provision imposes liability on parties who act improperly to avoid paying money, such as tariffs or duties, owed to the federal government. Through the FCA, the government can seek treble damages and significant per-claim penalties, while whistleblowers and competitors are incentivized to report violations through lucrative qui tam recoveries.
Going forward, DOJ will almost certainly continue to use these and other customs criminal statutes to aggressively pursue tariff enforcement. But an important development is its intention to increasingly use criminal laws—not only as an enforcement tool, but also likely as a powerful lever to pressure companies into cooperation and settlement. That shift signals a much more aggressive enforcement posture, raising both the legal and reputational stakes for companies facing scrutiny over tariffs.
While forecasting DOJ’s precise approach is difficult, there are a range of criminal statutes that are well-positioned to serve as key enforcement tools.
- Entry of Goods Falsely Classified / by Means of False Statements. DOJ often uses 18 U.S.C. § 541 (entry of goods falsely classified) and 18 U.S.C. § 542 (entry of goods by means of false statements) to combat tariff fraud. Violations of these sections can result in up to two years’ imprisonment.
- Criminal Enforcement Under the FCA. DOJ can criminally prosecute willful reverse FCA violations under 18 U.S.C. § 287. Violations are punishable by up to five years’ imprisonment.
- Criminal Enforcement Under the International Emergency Economic Powers Act (IEEPA), 50 U.S.C. §§ 1701–05. IEEPA grants the executive branch sweeping authority to regulate economic transactions in the context of an unusual and extraordinary threat to the United States coming wholly or partly from outside the country. The second Trump Administration has relied on IEEPA in imposing tariffs on U.S. trade partners and could seek criminal sanctions against trade fraud and tariff violators under IEEPA as well. Violations are punishable by up to twenty years’ imprisonment.
- Other Criminal Enforcement Mechanisms. DOJ may also use other criminal statutes to target customs fraud and tariff evasion, including:
- Wire Fraud/Wire Fraud Conspiracy, 18 U.S.C. §§ 1343, 1349, punishable by up to twenty years’ imprisonment.
- Smuggling, 18 U.S.C. § 545, punishable by up to twenty years’ imprisonment.
- False Statements, 18 U.S.C. § 1001, punishable by up to five years’ imprisonment.
- Conspiracy, 18 U.S.C. § 371, punishable by up to five years’ imprisonment.
How Businesses Can Prepare
Given the specter of severe penalties for tariff violations, companies should reevaluate their import controls programs and supply chains, and take care to quickly and effectively address potential concerns and violations.
As a starting point, companies first need to understand whether they are in compliance with the ever-shifting laws on tariffs and consider the classification, valuation and origin of items being imported into the United States. This can be done through a targeted risk assessment to understand potential exposure to conduct likely to attract DOJ and CBP attention, including:
- Undervaluing goods to reduce duties owed.
- Falsifying country-of-origin information, including through transshipment via third-party jurisdictions to conceal goods’ true origin.
- Misusing or misunderstanding the preferences in free trade and bilateral reciprocal agreements as part of their supply chains.
- Misclassifying or mischaracterizing goods to evade tariffs or reduce dutiable value.
- Structuring transactions to evade tariffs.
Companies should also take proactive steps to prevent trade law and tariff violations and to effectively address potential violations, including by:
- Reviewing internal compliance programs with respect to import controls, noting any gaps in identifying improper classification, valuation, country-of-origin reporting and transshipment.
- Reviewing and enhancing supply chain due diligence with an eye toward import/tariff concerns and high-risk jurisdictions, including enhanced third-party due diligence.
- Conducting a limited risk audit aimed at evaluating the effectiveness of trade controls compliance programs, including valuation and classification practices.
- Training employees on whistleblower and hotline reporting channels for trade controls issues.
- Promptly evaluating and thoroughly investigating all whistleblower and hotline complaints.
- Considering whether additional monitoring efforts are needed to detect irregularities in maritime shipments or other import channels.
Conclusion
President Trump is aggressively advancing a policy that encourages onshoring more manufacturing and, where that does not occur, imposing tariffs on U.S. importers. With the implementation of these policy objectives underway, enforcement will now follow. And with the persistent focus on export controls and sanctions, the risks in this space may be underappreciated by companies in light of the rapidly changing enforcement environment. The government is also likely to enforce tariffs in novel and untested ways. With DOJ’s move toward increasing criminal enforcement of trade fraud and tariff enforcement, companies should consider involving experienced trade, customs and white collar counsel to assist in managing these recent and developing risks.
