Cracking Down on Tariff Evasion and Customs Fraud

From January 20 to December 15, 2025, U.S. Customs and Border Protection collected a record-breaking $200 billion in tariff revenue, shining a spotlight on the enforcement vigor and increased scrutiny that the current administration is applying to cross-border trade. With import tariffs a top enforcement policy for the U.S. Department of Justice, importers and logistics-intensive businesses without a bullet-proof compliance strategy and strong due diligence process have serious cause for concern.

The government is pulling out all the stops to maximize tariff revenue and thwart bad actors attempting to circumvent tariffs. A new cross-agency Trade Fraud Task Force (TFTF) brings together the DOJ (both Civil and Criminal Divisions), Homeland Security, and CBP to “aggressively pursue enforcement actions against any parties who seek to evade tariffs and other duties, as well as smugglers who seek to import prohibited goods into the American economy.” 

DOJ also expanded its whistleblower pilot program to include “trade, tariff and customs fraud by corporations,” including an e-Allegations program which enables the trade community and general public to report suspected trade violations to CBP via an electronic portal. 

Tariff Evasion 101 

DOJ and CBP have their work cut out for them, as fraudsters execute calculated plans to evade duties and tariffs, often on a massive scale. For example, an Indonesian jewelry company was recently charged with perpetrating a years-long scheme to evade paying more than $86 million in Customs duties and tariffs on $1.2 billion of jewelry imports. 

To avoid the substantial bite that tariffs take out of the bottom line, bad actors are getting creative with their schemes to defraud the U.S. government, including:

• Undervaluation of goods;
• Misclassification of Harmonized Tariff Schedule (HTS) codes;
• Misdeclaration of country of origin;
• Transshipment (transferring goods from one mode of transportation to another — often from one vessel or port to another — during their journey from origin to destination to avoid duties);
• Dodging antidumping and countervailing duties;
• Illegitimate shell companies;
• “Double-dipping” by claiming more than one tariff exemption, and
• Abuse of special programs and foreign trade agreements.

The Strong Arm of the Law

As bad actors get bolder and craftier with their tariff-evasion schemes, the authorities have been stepping up enforcement tactics. DOJ’s whistleblower program is proving to be a useful tool in the enforcement toolkit, boasting a significant surge in complaints about alleged duty dodging between March and May 2025 — up 160% year-over-year. 

In addition to whistleblower tips, U.S. authorities are increasingly using data analytics tools and artificial intelligence to conduct audits, detect anomalies and investigate illicit tariff-evasion schemes. For example, CBP is taking advantage of AI to modernize the detection of illicit transshipment across global supply chains.

As it scales up enforcement efforts, DOJ has also raised the stakes for violations of import regulations. Historically, CBP relied heavily on administrative remedies such as fines, liquidated damages and prior disclosure negotiations, but DOJ today has shifted tariff fraud into the civil and criminal arena. Consider underpayment of tariffs: No longer just about CBP audits and penalty notices, DOJ is treating underpaid import tariffs as “false claims” under the False Claims Act (FCA), exposing companies to treble damages and penalties in the millions.

Both companies and individuals (including executives, compliance leaders and brokers) are finding themselves under scrutiny — and liable for penalty — when systemic tariff evasion is alleged. For example, executives from two Denver-area companies have been indicted for allegedly selling Chinese-origin forklifts as “Made in America,” and undervaluing the cost of the equipment using fake commercial invoices to evade more than $1 million in applicable tariffs, subjecting them to a maximum of 20 years in prison and a $250,000 fine.

Rethinking Trade Compliance

With CBP’s closer examination of compliance practices and harsher enforcement of violations, importers need to level up their compliance strategies and systems. Manual workarounds — whether “creative” HTS code choices, aggressive tariff mitigation strategies lacking adequate documentation, or opaque supplier structures — are more likely than ever to be detected and challenged, potentially resulting in criminal, financial and reputational damages. 

Against this backdrop of intense scrutiny, trade- and logistics-focused companies need to be able to adapt quickly to fast-changing tariffs, fine-tuning their compliance practices to address shifts in country-specific, sector-specific, and retaliatory import tariffs that can reshape cost structures overnight. Given that modern supply chains span multiple production steps and countries, each with its own tariff schedules, exemptions and rules of origin, importers also need to understand complex, multi-jurisdictional rules and how they impact their compliance processes.

With the complexity and uncertainty of today’s trade policy, importers still relying on outdated compliance practices, such as looking up HTS codes manually, are putting their global trade operations at risk and wasting time, labor and money. As they navigate ongoing tariff volatility, compliance professionals need centralized tools that combine authoritative trade content with automation, agility and auditability. 

In 2026, a centralized, automated, and documented HTS decision process is an essential piece of an importer’s compliance program. Integrated HTS classification code software — connected to enterprise resource planning, trade management system and customs filing systems — enables importers to assess shipping costs with precision through comprehensive HTS code searches and accurate landed cost calculations.

From an origin and routing transparency perspective, end-to-end visibility into supply chains, verified bills of materials and clear evidence supporting origin and FTA claims are imperative. Businesses must also have the automated tools to document transfer pricing rationale; reconcile invoice, payment, and declared values, and monitor exceptions. Notably, analytics and data-driven reports help companies defend their classification, valuation, and origin decisions and detect anomalies over time.

CBP Efforts Will Intensify

With $4 billion allocated to CBP to add 8,500 employees, including the recent $60,000 bonuses for new Border Patrol agents and CBP officers, in concert with the formation of the TFTF, expansion of the whistleblower program, and growing reliance on FCA and criminal tools, it’s clear that the crackdown on tariff evasion by the current administration isn’t a short-term campaign — it’s a strategic shift in how trade enforcement is resourced and executed.

In 2026, DOJ will be focused on promoting its “America-first” trade policy, while shutting down tariff evasion and Customs fraud by rooting out deception in country of origin, HTS classification and reported value of goods. 

In response, importers need a proactive, agile compliance strategy, supported by flexible trade compliance software and real-time global trade content, and embeds due diligence into sourcing, procurement, logistics and partner selection. Using data-driven compliance systems, companies can defend their classification, valuation and origin decisions to ensure a seamless flow of goods, while optimizing duty expenditures to realize sustainable tariff savings.

Jackson Wood is director of industry strategy, global trade intelligence for Descartes.