On May 12, 2025, the U.S. Department of Justice’s (DOJ) Criminal Division released a memorandum containing the Trump Administration’s new white collar enforcement priorities.1 Consistent with the Administration’s heightened focus on trade and tariffs, the DOJ announced that “trade and customs fraud, including tariff evasion” is a “high-impact” area and designated it as the second enforcement priority area after “waste, fraud, and abuse, including health care fraud and federal program and procurement fraud that harm the public fisc." 2 In addition to designating trade and customs fraud as a top enforcement priority, the DOJ also revised its Corporate Whistleblower Awards Pilot Program to add “trade, tariff, and customs fraud by corporations” as a priority area, which will provide financial incentives to corporate whistleblowers to report information about alleged criminal misconduct.
This marks a fundamental shift in the enforcement priorities of DOJ’s Criminal Division as trade and customs fraud-related matters have historically been addressed by U.S. Customs and Border Protection (CBP) and DOJ’s Civil Division. A very limited number of cases historically have risen to the level of warranting criminal prosecution. However, with this memorandum, DOJ is signaling to the importing community that there may soon be increased criminal enforcement and penalties for failing to comply with U.S. import laws.
There are a variety of criminal statutes that the DOJ could utilize to prosecute companies for alleged trade and customs fraud/tariff evasion.
- 18 U.S.C. § 1001 makes it unlawful to willfully “make{} any materially false, fictious, or fraudulent statement or representation.” This provision allows for fines and sentences of up to eight years in prison for violations.
- 18 U.S.C. § 541 makes it unlawful to effect the entry of goods “at less than the true weight or measure thereof, or upon a false classification as to quality or value, or by the payment of less than the amount of duty legally due.” This provision allows for fines and sentences of up to two years in prison for violations.
- 18 U.S.C. § 542 criminalizes the “entry of goods by means of false statements.” This provision also allows for fines and sentences of up to two years in prison for violations.
- 18 U.S.C. § 543 criminalizes the entry of goods where the payment of duty is less than the amount legally due. This provision also allows for fines and sentences of up to two years in prison for violations.
- 18 U.S.C. § 545 makes importing merchandise “contrary to law” a felony punishable by up to 20 years in prison. Liability under this statute is not limited to the U.S. importer of record such that other companies within the supply chain could be prosecuted.
It is thus critically important, now more than ever, that U.S. importers of record, as well as companies within the supply chain that purchase from and sell to U.S. importers of record, examine their U.S. import compliance procedures and ensure that adequate procedures are in place to correctly enter goods into the United States.
Increased Risk for Criminal Liability for Trade and Customs Fraud
With the inclusion of trade and customs fraud as one of the DOJ’s top white collar enforcement priorities, foreign exporters, manufacturers, and U.S. importers should take steps to limit exposure to potential new criminal and civil liability for fraudulent practices in the trade and customs arena, including, among others, tariff evasion, misclassification, and undervaluation. Consistent with DOJ’s heightened focus on trade and customs fraud, CBP has also recently emphasized its focus on duty evasion in several public announcements. In one announcement, CBP explained to the pharmaceutical trade community that “declaring incorrect value on import or export documentation is considered trade evasion” and emphasizes that it will pursue any violations “to the fullest extent possible.”3 In another public posting, CBP highlighted a recent Enforce and Protect Act duty evasion proceeding and commented that CBP “targets and combats duty evasion at every level...bad actors violating U.S. trade law will be identified, investigated, and punished to the fullest extent of the law.”4
As outlined above, the DOJ could bring criminal charges in these areas under a variety of statutes.5 Additionally, it is worth highlighting that the DOJ Enforcement Memo targets non-U.S. companies, specifically Chinese companies and entities, by prioritizing an “America First” strategy and aligning its enforcement focus with the administration’s foreign policy and trade policies.
Non-U.S. companies, especially Chinese companies, should more closely scrutinize their supply chains and compliance procedures to avoid potential criminal liabilities. In particular, companies should maintain procedures covering the following topics, and these procedures should provide instructions on what to do in the event that errors are discovered with regard to past entries.
- Classification of Imported Goods
- Valuation of Imported Goods
- Country of Origin of Imported Goods
- Forced Labor – Maintaining supply chain records confirming that no portion of the goods were produced using forced labor
- Determining whether the goods are subject to antidumping duties (AD)/countervailing duties (CVD) and/or other tariffs
- Determining Applicable Tariff Rates for Imported Goods (e.g., AD/CVD, Section 232, Section 301, Section 201, IEEPA, etc.)
Potential False Claims Act Liability
In addition to criminal liability, the DOJ Enforcement Memo coincides with the recent rise in increased False Claims Act (FCA) enforcement. The FCA prohibits, among other things, any person who “...knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.”6 The FCA imposes penalties consisting of substantial “treble damages,” which equals three times the government’s damages, plus other inflation-adjusted penalties.7 Based on the theory that tariffs are money owed to the government, the DOJ frequently prosecutes companies that knowingly or recklessly fail to return the money to the government through avoidance of tariffs, customs duties, and other obligations. The three main areas historically targeted by the DOJ in the trade arena are: 1) misclassification of imported products; 2) undervaluation of imported products; and 3) misrepresentation of country of origin.
The DOJ has signaled its intent to ramp up use of the FCA to prosecute customs and tariff fraud. Most recently, it stated that a $8.1 million FCA settlement with an importer for evasion of AD and CVD duties and Section 301 duties “sends a message that {the Government} will not stand aside when companies try to cheat the system.”8
In addition to the importer of record, the conspiracy provision under the FCA allows the DOJ to go after any businesses along the import chain, including upstream foreign exporters and suppliers and downstream U.S.-based companies. Those companies may not owe customs duties themselves but could face similar liability for “conspiring to commit a violation” of the other FCA provisions.9 The amount of settlements under the conspiracy theory have reached tens of millions of dollars.10
Many FCA claims have been brought by qui tam relators11 without DOJ involvement, the majority of whom are former employees of the companies. As discussed further below, companies are strongly advised to strengthen their internal reporting and compliance systems going forward to prepare for heightened whistleblower risks.
Recommendations for Risk Mitigation Strategies:
Importance of Proactive Monitoring and Improving Due Diligence Efforts
Companies should proactively conduct extensive due diligence in their supply chains and import operations to ensure that there are robust mechanisms in place to detect, report, and remedy any noncompliance with customs requirements. The DOJ Enforcement Memo underscores the importance of proactive and extensive compliance efforts. This is especially important since anyone in the supply chain may potentially be liable under 18 U.S.C. §§ 541-543, 545, 1001 and the FCA, as discussed above.
Improving and Expanding Trade-Focused Compliance Programs
Companies should examine their current compliance programs and consider increasing the focus on trade and customs compliance matters. The key issues and practices that must be reviewed and covered by a proper compliance program include, among others, country of origin marking and determination, valuation of imported products, classification of products, and AD/CVD/trade remedies. Companies should consider hiring competent counsel to consult regarding internal import compliance procedures and the above legal issues and if necessary, hire trade compliance personnel to oversee customs compliance. Written company policies and procedures regarding customs compliance should also be in place and reviewed on an ongoing basis for any applicable updates.
Contractual Review to Identify Potential Liability and Risk for Non-Compliance
Companies should consider reviewing their contracts more closely to identify the parties that are responsible for paying tariffs/duties and to identify any points of potential liability and risk of non-compliance. For example, it is important to identify which party or parties is/are responsible to pay any tariffs/duties, taxes, value-added tax (VAT), international transportation costs and customs formalities, as well as any applicable contractual terms specifying or assigning price changes in the event of government actions. There are now many different kinds of tariffs/duties in place – AD/CVD, Section 232, Section 301, IEEPA, Section 201, etc. – so it is especially important to specify which tariffs/duties are being paid by which party. As all parties along the supply chain could potentially face criminal and civil liability for trade and customs fraud, it is critical to review the contractual terms with both upstream and downstream partners.
Consider More Active Voluntary Disclosure Policies
The revised corporate enforcement policy and voluntary self-disclosure policy (CEP) provides more clarity to disclosing companies about the resolution of their case and encourages more voluntary self-disclosure. Under the revised CEP, it is no longer a presumptive, but guaranteed declination of prosecution if four requirements are met: 1) voluntary self-disclosure; 2) full cooperation; 3) timely and appropriate remediation; and 4) absence of certain aggravating factors.12 Companies should reassess their current self-disclosure policies and consider more active voluntary disclosure in the future. CBP also maintains a voluntary disclosure process to report civil import violations. Any prior disclosure materials filed with CBP must be properly recorded in case they can be used as potential DOJ disclosure materials. In sum, more rigorous record-keeping and active self-reporting could be helpful given both agencies’ enhanced scrutiny in the trade field.
