Import Fraud & Tariff Evasion Crackdowns Shippers Need to Know About

Import fraud enforcement is at an all-time high. Consider following:

• Customs Fraud Focus: Evasion of tariffs and customs duties was elevated to a top priority for DOJ civil fraud enforcement, with a particular emphasis on tariff evasion on goods from China.
• Historic Recoveries: The DOJ reported over $6.8 billion in False Claims Act settlements and judgments in the fiscal year of 2025. That’s the largest single-year recovery in the statute’s history.
• Whistleblower Surge: According to Wiley Law Analysis, a record of 1,297 “qui tam” lawsuits were filed by whistleblowers on behalf of the U.S. government in FY 2025, breaking the previous record of 980. 
• Money Recovery from Whistleblowing: Seyfarth Shaw Insights reported “qui tam” lawsuits accounted for over $5.3 billion of 2025’s recoveries.
• Criminal Investigations from Whistleblowing: Between May and September 2025 alone, 313 whistleblower tips led to 120 active criminal investigations.
• Volume of Cases: The DOJ reported a 17% increase in new FCA matters, totaling 1,698 new cases including both government-initiated and whistleblower cases.
• Criminal Indictments Up: The DOJ also reports 265 total defendants charged for various white-collar crimes, including a significant increase in trade fraud and tariff evasion cases within its Market, Government, and Consumer Fraud (MGC) Unit.
• Record Customs Settlement: Ceratizit USA LLC agreed to pay $54.4 million in December 2025 to resolve allegations of evading duties on Chinese goods. This was the largest customs-related FCA settlement ever.
• Big Misclassification Case: In August, WFAA News reported Allied Stone Inc. agreed to pay $12.4 million for misclassifying Chinese quartz products as marble to avoid anti-dumping duties. 

Why the Crackdown?

Large factors in government enforcement increases on tariff evasion and import fraud are the creation of the Trade Fraud Task Force in August of 2025 and the Department of Justice (DOJ) and U.S. Customs and Border Protection (CBP) shifting from traditional civil penalties for tariff evasion to aggressive criminal prosecutions, utilizing wire fraud, conspiracy, smuggling, and willful violations of executive-ordered tariffs charges that all carry up to 20 years in prison as well as entry of goods by false statement charges that carry up to 2 years in prison.

The driving force for enforcement increase is the importance of tariffs to Trump Administration policy and strategy. In fact, tariffs are a key element of President Trump’s foreign and domestic strategies. The president uses tariffs to combat trade deficits, create leverage for peace and trade deals, change relations with trade partners to advantage America, coax spending and investing in U.S. industries, generate revenue for the government, fight the out-of-control national debt, increase domestic production and jobs… President Trump has even talked about tariffs as a means to fundamentally change the U.S. tax system, potentially replacing federal income tax.

I don’t think there’s been much hope for that last goal since the passage of the 16th amendment and permanent income tax legislation in 1913.

Tariffs replacing income taxes aside, will the president reach all of his goals with tariffs? Not likely. However, they have helped him negotiate numerous trade and peace deals and generate hundreds of billions of dollars in government revenue. The Supreme Court decision, along with the tariff refund results, against the president’s usage of IEEPA for tariff authority was a setback in the president’s tariff agenda, but it hasn’t changed the administration’s plans and hopes for tariffs. And tariff evasion is an even bigger problem for President Trump’s tariff goals.

According to Goldman Sachs analysts (as reported by Sasha Rogelberg in a Fortune article), tariff evasion costs the government $40 billion a year. Not just that, but in 2025, there was a $150 billion discrepancy between U.S.-reported imports from China and China-reported exports to the United States. Goldman Sachs estimated $80 billion of that was directly due to tariff evasion.

With President Trump’s tariff hikes, the stakes of tariff evasion are higher. Higher tariffs usually means more tariff evasions. Even if tariff evasion activity stayed static with the increased tariffs, the revenue lost would multiply with the hikes. Ultimately, it’s not surprising the Trump Administration would increase import fraud enforcement nor that there’s a specific emphasis on imports from China.

Manufacturers Can Get Importers in Trouble

Back in May, Universal Cargo’s blog warned U.S. importers to beware Chinese exporters trying to skirt tariffs with fraud. Shippers risk legal problems by being complicit in such fraud, even if they unknowingly are part of fraudulent shipments.

One way U.S. importers can be enticed into trouble is Chinese exporters offering deals where they pay all of the tariffs, sometimes charging less for the entire shipment of goods than the tariffs alone would amount to. Most people learn at a young age to recognize deals too good to be true as red flags. However, a cheap deal utilizing a DDP Incoterm, where the exporter is responsible for all the duties and tariffs, can make importers feel like they’re saving money and have nothing to worry about when it comes to tariffs.

However, importers face significant legal and financial risk from foreign exporters evading tariffs on their shipments. The CBP holds the importer on record responsible for compliance despite incoterm or contractual details between the importer and exporter. That means importers could face goods seizure, fines, or even criminal charges with time in jail for the tariff evading actions of exporters they work with.

Common ways shippers attempt to commit tariff evasion are transshipments, trying to mask the country of origin for goods; misclassification, using improper codes on goods for product types with lower tariffs; and undervaluation of goods.

That’s not an exhaustive list of ways people and companies commit import fraud. Utilizing shell companies, claiming multiple exemptions, or trying to improperly use now largely closed loopholes of de minimis shipments to avoid tariffs are a few of the other ways.

Shippers need to know the government has been cracking down and be wary not to get caught in the crossfire. Universal Cargo is watching how this affects supply chains, especially China to U.S. e-commerce shipments. You can expect this isn’t the last you’ll hear about this in our blog….