Transatlantic Trade Monitor: Facts You Need Now | Tariff Noncompliance and Evasion: Risks and Enforcement Trends

By: Kerem Bilge, Counsel, Thompson Hine LLP

Over the past decade, the global trade landscape has shifted sharply toward more complex tariff regimes. During President Donald Trump’s first administration, the U.S. government imposed wide-ranging Section 301 tariffs on hundreds of billions of dollars on imported goods from China and Section 232 national security tariffs on U.S. imports of steel and aluminum products worldwide. During President Joe Biden’s administration, most of these tariffs were maintained and further increased on certain Chinese-origin products following the four-year review of the Section 301 measures.

Since the start of President Trump’s second administration, the United States has significantly expanded both the scope and rates of tariffs. Relying on the International Emergency Economic Powers Act (“IEEPA”), the Trump administration has imposed “reciprocal” tariffs ranging from 10% to 40% on nearly all U.S. trading partners. It has also broadened the scope and application of Section 232 tariffs, (1) imposing significant duties on strategic products such as passenger vehicles, automotive parts, and copper, (2) eliminating virtually all exemptions for existing steel and aluminum tariffs, and (3) applying section 232 tariffs to numerous “derivative” products containing steel, aluminum, and/or copper content.

Although the Trump administration has entered into limited trade agreements with certain partners, such as the European Union, the “favorable” terms for these deals still impose significantly higher tariffs than the low-duty rates previously available to U.S. importers.  The average tariff rate on U.S. imports from the EU before the second Trump administration was 1.2%.[1]  The trade agreement between the United States and EU now imposes a 15% tariff duty rate on most U.S. imports from the EU.[2]

The new high-tariff and increasingly complex trade environment has made both inadvertent customs noncompliance and intentional tariff evasion more likely, as companies struggle to navigate rapidly changing duty rates, shifting product scopes, and overlapping trade restrictions.  U.S. enforcement agencies are under pressure to protect revenue and domestic industries, and they are deploying new tools and resources to detect and punish violations. As a result, companies that attempt to sidestep these obligations—or that inadvertently fall short on compliance—face significant legal and financial exposure.

Common Customs Violations

Customs violations can take many forms. Some U.S. importers misclassify products under incorrect Harmonized Tariff Schedule (“HTS”) codes to secure lower duty rates. Others undervalue shipments on entry documentation or falsely declare the country of origin to exploit free trade agreements or avoid duties imposed on certain countries. A common tactic in trade remedy cases is transshipping goods through third countries to disguise their origin and evade antidumping or countervailing duties.

More complex schemes may involve using related-party transactions or shell companies to obscure the true origin, U.S. importer, seller, or value of goods. Even if not intended as fraud, these practices can trigger liability when they result in material misstatements to customs authorities.

Enforcement Risks and Penalties

The consequences of tariff evasion and customs noncompliance can be severe—and enforcement has become increasingly aggressive. Under 19 U.S.C. § 1592, U.S. Customs and Border Protection (“CBP”) can impose civil penalties not only for fraud but also for gross negligence and negligence in import transactions. In other words, a company can face substantial penalties even if it did not intend to violate the law.

Specifically, U.S. importers can face significant penalties based on their level of culpability:

• Fraud: Up to the domestic value of the merchandise;
•  Gross Negligence: Lesser of the value of the merchandise or four times the loss of duties; if no duty loss, 40% of the dutiable value of the merchandise for gross negligence; and
• Negligence: Lesser of the value of the merchandise or two times the loss of duties;
if no duty loss, 20% of the dutiable value of the merchandise.

CBP uses information requests (i.e., CBP Form 28), customs exams/detentions, audits, and penalty actions to uncover false declarations. Foreign companies can also be held liable under the “aiding and abetting” provision of 19 U.S.C. § 1592.

The U.S. Department of Commerce (“DOC”) and CBP share enforcement responsibilities for evasion and circumvention of trade remedy orders.  The DOC can issue scope rulings or conduct anti-circumvention inquiries to determine if further processed products in third countries fall within existing orders, while CBP can investigate under the Enforce and Protect Act (“EAPA”) to determine whether U.S. importers are evading trade remedy duties through transshipment or other schemes. EAPA cases can be initiated by domestic producers, U.S. importers, or foreign manufacturers/exporters, and they move quickly—often triggering interim measures such as cash deposit requirements within 90 days.

In addition, the U.S. Department of Justice (“DOJ”) may take both civil and criminal enforcement actions against U.S. importers that make false declarations to CBP and deprive the United States from tariff revenue.  Companies can face significant liability under the False Claims Act (“FCA”) when false statements deprive the government of tariff revenue. FCA violations can carry treble damages, and cases are often initiated by whistleblowers through qui tam actions, dramatically increasing litigation risk.  The DOJ can pursue criminal investigations and impose penalties, including fines and/or imprisonment up to 20 years for some offenses.

Beyond financial penalties, companies risk suspension of import privileges, supply chain disruptions, and lasting reputational damage with customers, investors, and regulators.

Current Enforcement Policy

In fact, the U.S. government has repeatedly emphasized its renewed focus and enforcement priorities in connection with customs and tariff compliance.  The Trump administration views trade violations as a national security issue and squarely against the administration’s “America First” policy.

Various executive orders issued by the Trump administration mandate strict enforcement of the trade laws.   A recent Section 232 steel and aluminum proclamation instructs CBP to issue guidance “mandating strict compliance with declaration requirements” for steel/aluminum content in derivative products and encourages maximum penalties for noncompliance.[3] Executive Order 14326, which modified “reciprocal” tariffs, instructs CBP to apply a 40% tariff duty (in lieu of otherwise lower “reciprocal” rates) and other applicable fines or penalties for products that are determined to be “transshipped” to evade reciprocal duties.[4]  Executive Order 14326 also mandates CBP to not allow “for mitigation or remission of the penalties assessed on imports found to be transshipped to evade applicable duties.”[5]

Further, the DOJ released a memorandum in May 2025 emphasizing that “trade and customs fraud, including tariff evasion” is among the top three enforcement priorities of the DOJ’s criminal division.[6]  In August 2025, the DOJ launched the Trade Fraud Task Force to coordinate efforts between its civil and criminal divisions and the U.S. Department of Homeland Security.[7] The task force is charged with pursuing enforcement actions against U.S. importers who unlawfully evade tariffs and other customs duties, as well as parties who illegally import prohibited goods, and has hired dozens of new agents to significantly expand enforcement activity.

Reducing Risk Through Compliance

Given the stakes, companies engaged in cross-border trade must take proactive steps to manage their customs compliance risk. Key best practices include:

• Conducting internal audits to identify customs violations, including misclassifications, undervaluation, or country-of-origin errors;
• Implementing robust compliance programs, including documentation and recordkeeping systems;
• Providing regular training for employees on customs regulations and duty obligations;
• Consulting experienced customs counsel before restructuring supply chains or sourcing from new jurisdictions; and
• Considering prior disclosures to CBP when potential violations are identified, which can mitigate penalties.

Conclusion

U.S. customs enforcement is no longer sporadic or reactive – it is systematic and aggressive. Regulators are well-resourced, data-driven, and increasingly coordinated. Penalties can be severe for both companies and individuals. Companies that treat customs compliance as a strategic business priority can reduce risk, protect their supply chains, and maintain their competitive edge.  Compliance programs, regular trainings, and self-disclosures are vital in minimizing these risks and mitigating potential fines and penalties.

[1] https://www.cnn.com/2025/07/27/business/eu-trade-deal.

[2] https://www.whitehouse.gov/briefings-statements/2025/08/joint-statement-on-a-united-states-european-union-framework-on-an-agreement-on-reciprocal-fair-and-balanced-trade/.

[3] Adjusting Imports of Aluminum and Steel Into the United States (Proclamation 10947), 90 Fed. Reg. 24199 (June 9, 2025).

[4] Further Modifying the Reciprocal Tariff Rates (Executive Order 14326), 90 Fed. Reg. 37963 (Aug. 6, 2025).

[5] Id.

[6] Memorandum from Matthew R. Galeotti to All Criminal Division Personnel, “Focus, Fairness, and Efficiency in the Fight Against White-Collar Crime” (May 12, 2025) available at https://www.justice.gov/criminal/media/1400046/dl?inline (last accessed Sep. 14, 2025).

[7] https://www.justice.gov/opa/pr/departments-justice-and-homeland-security-partnering-cross-agency-trade-fraud-task-force.

Compliments of Thompson Hine