DOJ Shifts Focus to Trade and Customs Fraud

The U.S. Department of Justice (DOJ) is shifting its enforcement priorities from healthcare, federal program, and procurement fraud to trade, tariff, and customs fraud committed by corporations. This change follows a Goldman Sachs report estimating that tariff evasion may have accounted for as much as $90 billion in U.S. imports from China after the imposition of Section 301 tariffs by President Trump in 2018.

Historically, trade violations were handled primarily by U.S. Customs and Border Protection (CBP) and the DOJ’s Civil Division, with criminal prosecutions being rare. However, under the DOJ’s new framework, the Major Frauds Unit – previously tasked with investigating procurement fraud and market manipulation – will now pursue cases involving long-running fraud schemes, senior corporate executives, and large-scale tariff evasion that results in significant revenue loss.

As part of this effort, the DOJ is reorganizing and expanding the unit by incorporating staff from the Consumer Protection Branch. The newly enlarged division will be renamed the Market, Government, and Consumer Fraud Unit.

Additionally, the DOJ has updated its Corporate Whistleblower Awards Pilot Program to include trade, tariff, and customs fraud among the reportable violations. Whistleblowers may receive a percentage of any forfeitures recovered by the government as a result of their report.

Common Tariff Evasion Methods

Tariff evasion may involve the following tactics:

• Misclassifying products under an incorrect HTS code or product description
• Undervaluing goods
• Misrepresenting the country of origin or concealing transshipment activity
• Misapplication of qualification rules under free trade agreements such as USMCA

Even when unintentional, errors in import reporting can occur due to:

• Complexities in HTS classification
• Challenges in applying non-transactional valuation methods
• Difficulty identifying the country of origin when production involves multiple countries
• Mistakes in establishing free trade agreement applicability

Importance of Reasonable Care

Importers are legally required to exercise reasonable care in reporting the Harmonized Tariff Schedule (HTS) classification, declared value, country of origin, and eligibility for preferential trade programs. Establishing and maintaining a well-structured, comprehensive Customs compliance program is essential to detect, address, and correct reporting issues. Such programs help reduce the risk of trade negligence or fraud and ensure accurate duty assessment in accordance with CBP regulations.

At Allyn International, we are committed to supporting the global trade community with strategic, forward-thinking solutions to help navigate today’s complex tariff landscape. Whether you have questions about tariffs, trade agreements, or would like to explore strategies to reduce their impact on your business operations, our team is here to help. Contact us today for a consultation at sales@allynintl.com, call 239-489-9900, or reach out here. 

Contributor: Rebecca Anderson

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About Allyn International

Allyn International is dedicated to providing high quality, customer centric services and solutions for the global marketplace. Allyn's core products include transportation management, logistics sourcing, freight forwarding, supply chain consulting, tax management and global trade compliance. Allyn clients range from small local businesses to Fortune 500 firms. Allyn conducts business in more than 20 languages and has extensive experience in both developed and emerging markets. Highly trained experts are positioned throughout North and South America, Europe and Asia. Allyn’s regional headquarters are strategically located in Fort Myers, Florida, U.S.A., Shanghai, P.R. China, Prague, Czech Republic, and Dubai, U.A.E. For more information, visit www.allynintl.com.