One internal message can turn a tariff problem into a fraud problem.
Not because a single email triggers an investigation by itself, but because once the government starts asking questions, the record your team created under pressure becomes the story the government reads.
For years, importing looked manageable. You picked a classification, confirmed country of origin, declared value, paid the duty, and moved the goods.
That approach is outdated. Tariffs are now being used as a lever in broader economic and security policy, and enforcement priorities are shifting with it. On August 29, 2025, the U.S. Department of Justice announced an interagency Trade Fraud Task Force with the Department of Homeland Security (DHS), aimed at aggressively pursuing parties who evade tariffs and other duties. Around the same time, enforcement actions and public reporting made clear what the government is focused on: classification, origin, valuation, and the internal controls that drive the inputs behind those numbers.
Three things follow. Tariff problems are increasingly treated as potential fraud, not just fixable paperwork. Your broker is not a shield. Workarounds created in a hurry often leave the exact paper trail that makes a bad situation worse.
Not every customs issue rises to fraud. But the line between honest error and actionable evasion can be thin when internal records suggest awareness.
If your company imports at scale, the biggest risk is no longer just what the duty rate will be next quarter. The bigger risk is what your team does when the duty rate changes and the business starts scrambling.
And the first place that breaks down is where most companies think they are protected.
Your customs broker is not your import compliance program
Many importers operate as if their customs broker is their compliance program. That’s a dangerous assumption.
Brokers are essential, but they are not your internal control system. They do not independently verify your origin story, your valuation inputs, or whether your description is written to push classification toward a lower duty outcome. A broker acts as your agent for CBP filings based on the information you provide, but the importer of record ultimately owns the accuracy of those declarations and the underlying facts that drive them. If the inputs are incomplete, aggressive, or wrong, the broker cannot fix that for you, and CBP will look to the importer of record for answers.
When enforcement arrives, the government is often looking for the story behind the numbers. What did you know? What should you have known? What did you document? What do your internal messages reveal about why the company chose the position it chose?
What procedures do you have to surface and address these issues?
It also helps to be precise about who is showing up. It is not “DHS” in the abstract. CBP is one part of DHS. CBP has a full toolkit of ways to investigate and enforce U.S. trade laws. You could be getting a routine request from CBP for additional or clarifying information. Or you could already be in the crosshairs of a full investigation that involves not just CBP, but also the Department of Justice (DOJ).
Other agencies like the Department of Commerce, the Bureau of Industry and Security (BIS), the Food and Drug Administration (FDA), and the Animal and Plant Health Inspection Service (APHIS) may also be coordinating with CBP on your particular issue. A simple request from CBP can be routine. If it is handled poorly, it can create red flags that draw in more enforcement attention and more agencies.
Section 301 and other tariff volatility turns routine import decisions into crisis decisions
Importers are operating in a world where policy moves can hit quickly and the practical rules of the road can change midyear, midmonth, or midweek. That makes forecasting landed cost, pricing, and supply commitments harder than it should be.
For many companies, the scramble started with tariffs from President Trump’s first term, mainly the China Section 301 tariffs, the steel and aluminum Section 232 tariffs, and shifting exclusion windows, plus the downstream effects on pricing and customer commitments.
Tariff volatility spiked in 2025, with President Trump announcing multiple rounds of new tariffs, including IEEPA “reciprocal” tariffs and new or expanded Section 232 measures tied to steel and aluminum. Rates, effective dates, and exceptions have shifted repeatedly, sometimes negotiated on a country-by-country basis. Trying to keep track of these changes has been a constant challenge.
Volatility changes behavior inside companies. When margins get squeezed, teams go searching for relief. Some relief is lawful and smart: renegotiating contracts, redesigning products, changing sourcing, or using legitimate trade programs supported by real facts. Other relief is a shortcut that gets justified as strategy.
The path into trouble is usually gradual. A workaround gets used once. Then it gets used again. Then it becomes standard. Then the company is living inside a story it will later have to defend.
How good companies drift into customs noncompliance
Most serious tariff problems are not built around villains. They are built around predictable pressures and weak controls.
Pressure makes risky moves feel necessary
Tariffs can turn a profitable product into a loss overnight. A quote that worked last month is suddenly underwater. A key customer is threatening to walk. A delayed shipment becomes a revenue event.
That pressure is normal. It is also what makes bad options sound practical.
If your process only works when everyone is calm, it will fail when the tariff environment forces the business to move fast.
Weak handoffs create openings
Trade compliance is full of judgment calls. Classification can be nuanced. Country of origin determinations can be fact intensive. Valuation can be technically complex. Layer in handoffs among suppliers, forwarders, brokers, purchasing, and finance, and you create places where a small change can quietly reshape the duty outcome.
When one person can change a product description, pick a favorable classification, shape the origin narrative, or omit a cost element from declared value, you have the type of opening that turns pressure into legal risk.
Rationalizations create intent in hindsight
People rarely say, “Let’s evade duties.” They tell themselves something that feels cleaner.
It is just a description issue. It is a gray area. Everyone does it. We will correct it later.
Those rationalizations matter because they create a record. Prosecutors use this kind of language relentlessly because it shows people knew where the line was, even if they talked themselves into believing they stayed on the right side of it.
Here is the kind of sentence you never want in writing:
We know the origin story is aggressive, but if we route it through Country X we can cut the duty and we probably will not get questions.
Capability makes the shortcut real
Many tariff violations require know-how. Someone understands which classifications draw less scrutiny. Someone knows how to draft descriptions that tilt the analysis. Someone can build an origin story that sounds plausible on paper. Someone knows how to structure invoices.
This is not a character issue. It is an internal controls issue. Access plus expertise is where risk concentrates.
The warning signs that trigger CBP and DOJ scrutiny
These are the patterns that keep showing up in audits, investigations, and disputes, ordered by how frequently they appear in enforcement matters. When you see any of the patterns below, treat them as warning signs, not creativity.
Tariff classification decisions driven by savings instead of support
The classic failure mode is choosing a classification because it lowers duty, without strong technical support and consistent documentation.
In an audit, the question is not only whether you were wrong. The question is whether your position was reasonable and whether your record reflects disciplined analysis. Did you consult with an outside professional for an independent analysis of whether your classification made sense? Or did you rely on the hope that your preferred classification would hold up because it carried a lower tariff rate?
Customs valuation errors that quietly exclude costs
Because many duties are tied to value, undervaluation is a predictable temptation.
Problems often involve missing assists, tooling, molds, development costs, side payments, or sloppy related party pricing analysis. Some of these start as incomplete tracking of costs and then become deliberate omissions when nobody wants to find the real number.
Country of origin claims that rely on paperwork more than production reality
Origin is often complicated. That complexity becomes a temptation when companies start stretching facts to support a preferred outcome.
CBP has dedicated procedures under the Enforce and Protect Act to investigate evasion of antidumping and countervailing duty orders. Under EAPA’s implementing regulations at 19 CFR Part 165, interim measures can include suspending or extending liquidation for covered entries and requiring additional security, including a single transaction bond or cash deposit.
EAPA also matters because it can be adversarial. Investigations are often triggered by an interested party, including a competitor, and the process can involve sharing business confidential information with party representatives under a protective order. That changes the risk profile. It is not just the government asking questions. It is an adversarial process in which your documentation and your story get pressure tested.
If CBP ultimately makes an affirmative evasion determination, the regulations drive consequences around liquidation and AD/CVD collection for covered entries, and the matter can also draw broader enforcement attention.
Even when your issue is not an EAPA case, the lesson is the same: origin narratives that are not anchored in real manufacturing facts can collapse under scrutiny.
Origin games also collide with forced labor enforcement. Under the Uyghur Forced Labor Prevention Act, the government applies a rebuttable presumption for covered goods, which can translate into detention and severe supply chain disruption if you cannot support your sourcing story with real, consistent documentation. If you are getting creative with origin to manage tariffs, you can walk directly into a different enforcement regime with different consequences.
Intermediaries used to create distance and deniability
Intermediaries can be legitimate. They can also be used to create distance between the importer of record and the facts.
A common example is routing goods through a third country with minimal processing, then relying on that country’s paperwork while never verifying the underlying manufacturing facts. When a structure looks designed so the company can later claim it did not know, investigators tend to view that as the point of the structure.
Why good people make bad customs decisions under tariff pressure
Companies do not drift into this because their people are stupid. They drift into it because incentives are misaligned.
The logistics team is judged on landed cost and on-time delivery. Sales is judged on keeping the customer. Operations is judged on keeping product moving. Legal is judged on being the group that says no.
In that environment, a creative solution gets rewarded in the short term, and the risk shows up later, when the incentives have moved on and the record is already written.
When a tariff issue becomes an enforcement matter, your internal record becomes the story
Once this becomes an enforcement matter, it stops feeling like compliance and starts feeling like litigation.
Emails become evidence. Policies become irrelevant if practice contradicts them. Controls are judged on whether they could actually prevent the conduct at issue. Employees become witnesses.
It is also not only audits. Customs duty disputes can show up as False Claims Act cases brought by private relators, which changes the risk calculus for companies that assume only the government can start the process.
This is why tariff risk can become a crisis for senior leadership even when the issue started as a routine import decision.
Have a written plan for when tariffs change suddenly
Internal controls must force high-risk decisions into daylight. You cannot control tariff announcements. You can control whether your organization makes panicked, undocumented choices when they hit.
A plan is not a generic policy. It is an operational response that answers who owns decision making, how pricing updates happen, how supplier changes are evaluated, when shipments pause, and when legal review is mandatory.
A written plan prevents improvisation. Improvisation is where you get both bad decisions and bad documentation.
Make duty reduction a disciplined channel, not a scramble
There are lawful ways to reduce duty exposure, but they require facts, structure, and documentation.
If duty reduction ideas are being invented in the moment by sales pressure, supplier suggestions, or logistics urgency, you are already in the danger zone. The answer is not to ban creativity. The answer is to route it through a controlled process that tests whether the facts support it.
Treat tariff classification, country of origin, and customs valuation as positions you may need to defend years later
If you take a position that materially reduces duty, build a file that explains what the product is, why the classification is correct, what facts support origin, and how valuation was calculated.
If your file is basically “the broker said it was fine,” you are relying on hope.
Start where the incentives to cut corners are highest
You cannot review everything. Start with the highest duty items, the highest volume lanes, the most complex origin stories, and the classifications with the most ambiguity.
Those are the places where pressure is most likely to distort judgment.
Treat third party solutions as risk signals
When a supplier, forwarder, or broker suggests changing descriptions, splitting invoices, rerouting through a new country, or taking an aggressive origin position, treat it as a warning about their risk tolerance.
Even when a suggestion is not outright illegal, it often signals that the counterparty is comfortable operating near (or even beyond) the line, and that changes your risk profile.
Make escalation fast and safe
When raising concerns is slow, unclear, or politically punished, people stop raising them. That is how compliance becomes theater.
Escalation needs to work under pressure, not only in training.
Add one internal control that actually changes outcomes
Escalation is necessary, but it is not enough. Once escalation works, you need at least one control that forces the highest risk decisions into daylight before they become habits.
Here is an example that works because it is simple and it changes behavior. Require legal or compliance sign off before any classification change that reduces duty materially. Require the same sign off before adopting any new origin position that affects AD/CVD exposure.
Controls like this are not about slowing the business down. They are about preventing a quiet fix from becoming a public problem. Internal controls create accountability, but they cannot substitute for specialized expertise when the stakes are high or the fact pattern is complex. That is when the decision to involve trade counsel stops being optional.
When to bring in international trade counsel
Most companies do not get into trouble because they set out to cheat. They get into trouble because they make fast decisions in an uncertain environment and only later learn that the government sees those decisions as intentional.
Trade counsel changes the decision making dynamic in a way that brokers and consultants usually cannot.
A good trade lawyer is independent. They are not paid to keep cargo moving or to hit a duty savings target, which makes it easier for them to tell you when the facts do not support the position you want.
Trade counsel can also change how your company is perceived when the government later reviews what happened. A company that hires specialized counsel early, shares the full facts, and follows the advice looks like a company trying to get it right. That does not create immunity, but it does support a reasonable care and good faith narrative. The opposite is also true. If you shop for answers, feed counsel partial facts, or ask for advice and then ignore it, you can end up with a record that makes the situation worse.
Trade counsel also knows the enforcement landscape has shifted. In its June 23, 2025 decision in Island Industries, Inc. v. Sigma Corp., the Ninth Circuit held that customs duty avoidance allegations can be pursued through the False Claims Act and upheld a judgment against the importer based on false statements tied to duty avoidance.
We have seen the same dynamics in enforcement matters. In a major case involving Univar USA Inc., our international trade lawyers represented several of the parties who brought the matter to the government’s attention. The government alleged Univar routed Chinese-origin saccharin through Taiwan and falsely declared it as Taiwanese to avoid antidumping duties. This resulted in a massive enforcement action from which the government recovered $62.5 million—still the largest 19 U.S.C. § 1592 recovery ever in the Court of International Trade.
Together, the Island Industries and Univar cases demonstrate three practical truths. First, competitors and other industry insiders are highly motivated and often well positioned to spot duty evasion. Second, government resources are limited, and agencies increasingly rely on whistleblowers and third-party leads to uncover violations they would not otherwise find. Third, the financial incentives can be large, which means the risk is not just a government audit. It can become a whistleblower driven case.
For a business audience, the practical takeaway is simple: customs duty problems can turn into whistleblower driven litigation, not just a government audit.
Trade counsel should help you move forward with positions you can support, and warn you off what you cannot support, before your team commits to a story that later becomes evidence.
One practical reason timing matters: customs duty and penalty actions are subject to statutory deadlines that vary by claim type. For many actions, five years is the baseline under 19 U.S.C. § 1621, but the clock can run from the violation date or from discovery depending on the circumstances, and timelines can be extended or suspended in AD/CVD and litigation contexts. That means a classification decision you make today could surface as an enforcement matter years later, and the record you create now becomes the evidence the government reviews then.
One practical benefit of trade counsel is that they can take a real fact pattern to CBP before you bet the business on it, using CBP’s ruling process. A ruling request can be withdrawn at any time before CBP issues the ruling or otherwise finally disposes of the request.
Rulings can provide clarity, but they are generally not private.If CBP rejects a confidentiality claim, the requester can withdraw the ruling request by written notice within 10 working days of CBP’s notification. Engaging CBP can be smart, but do not confuse advance clarity with confidentiality. Trade counsel adds value by structuring the submission so you get a meaningful answer without oversharing what you do not need to share.
Prior disclosure to CBP is strategic, not mechanical
Sometimes the right move is not a forward looking ruling. Sometimes the company needs to address a past issue.
CBP’s prior disclosure framework does not eliminate liability. What it can do is sharply limit civil penalty exposure if handled correctly and timed correctly. The statute provides penalty caps for qualifying prior disclosures. The regulations tie eligibility to disclosure before, or without knowledge of, the commencement of a formal investigation.
Whether to make a prior disclosure is a major strategic decision that should involve both trade counsel and litigation counsel, especially if there is any indication a formal investigation may already have commenced.
Depending on what the issue actually is, some companies also evaluate whether disclosures to other agencies are appropriate, including DOJ or Commerce. Another reason to involve counsel early is that the right answer is sometimes not “file something,” but “figure out what happened, preserve the record, and make a deliberate decision.”
What federal enforcement trends mean for importers
Federal enforcement agencies have signaled a more aggressive posture toward tariff and duty evasion, backed by coordinated civil and criminal tools, and the trend lines are consistent with that message.
If your company is feeling squeezed right now, this is the wrong moment to get creative with classification, origin, valuation, or intermediaries. It is the right moment to slow down, document positions you can stand behind, and pressure test weak points before you adopt a workaround you may have to defend years later.
One question to ask internally is this: if CBP or DOJ requested your file and your internal communications tomorrow, would you be comfortable with how your company explained its decisions?
The cost of getting this wrong is rarely just the duty you tried to save. It is penalties, seizures, investigations, supply chain disruption, and an internal crisis that consumes executive attention long after the shipment has cleared, or been seized.
FAQ
Why is tariff enforcement suddenly treated like a fraud issue rather than a clerical one?
Because the government is increasingly treating duty evasion as a form of deception that affects national and economic security, not just a filing mistake.
That shift changes how cases get staffed and how evidence gets evaluated. Once a company’s internal record suggests it knew the line and pushed past it, the issue stops looking like a correctable error and starts looking like a fraud theory.
What are the most common customs mistakes companies make under tariff pressure?
The repeat offenders are classification changes chosen for savings rather than technical support, origin narratives that rely on paperwork rather than real production facts, and valuation work that omits required cost elements.
Another pattern is pushing responsibility outward by adding intermediaries or complex routing that creates distance from the underlying facts.
Can a competitor sue our company for tariff mistakes?
Potentially, yes. In some cases, customs duty underpayment allegations can be framed under the False Claims Act through qui tam litigation brought by a private relator.
A competitor, former employee, or other insider does not need to “win” on day one to create a serious problem. The cost and disruption often start when the allegation becomes a case, not when it becomes a judgment.
Can a customs broker protect my company from CBP enforcement?
A broker can file accurately based on what you provide. A broker cannot substitute for internal controls, cannot correct missing facts, and cannot create legal cover for unsupported positions.
The importer owns the accuracy of the information that drives classification, origin, and valuation.
What is an EAPA investigation and how does it start?
EAPA is a CBP process focused on evasion of antidumping and countervailing duties. It is often triggered by an allegation from an interested party, including competitors.
That is one reason EAPA can feel more adversarial than a routine compliance check.
What does UFLPA mean for origin claims and supply chain documentation?
UFLPA raises the stakes for anything that looks like “creative” origin positioning.
If your sourcing story cannot be supported with consistent documentation, you are not just risking a duty dispute. You are risking detention and supply chain disruption, plus reputational fallout that tends to travel faster than legal resolution.
When should a company consider a prior disclosure to CBP?
When you believe a material error occurred and you want to reduce civil penalty exposure, prior disclosure may be an option.
The decision turns heavily on timing and on what you know about whether a formal investigation may already have commenced. This is not a fill in the blank exercise. It is a high stakes strategy decision.
Are Section 301 China tariffs still the main driver, and what else is being scrutinized?
Section 301 tariffs on China remain a major driver of the scrambling that leads to bad decisions.
But scrutiny does not stop there. Transshipment risk is a recurring problem area, especially when goods are routed through a third country with minimal processing and the paperwork does not match the manufacturing reality. If the story does not match what actually happened, it stops being strategy and becomes exposure.
Can tariff and customs issues turn into False Claims Act whistleblower cases?
Yes. Customs duty allegations can show up in whistleblower led litigation in addition to government audits and investigations.
That is why sloppy internal communications and unsupported positions are so dangerous. They create the evidence a relator will try to use.
What red flags should our internal audit team look for?
Start with changes that produce meaningful duty savings and ask what actually changed in the real world.
Watch for sudden product description or HTS changes that are not supported by a written technical file. Watch for declared values that do not reconcile to invoices or that omit assists such as tooling, molds, or design work.
Watch for suppliers or intermediaries proposing complex routing through third countries as a “solution.” Watch for origin narratives that rely on certificates and templates instead of factory level facts. Watch internal messages for rationalizations, because that is where intent gets manufactured after the fact.
What internal controls reduce customs risk without stopping shipments?
Controls that force the highest risk changes into daylight are usually the most effective.
Examples include requiring legal or compliance sign off before any duty reducing classification change, requiring sign off before adopting any new origin position that affects AD/CVD exposure, and requiring a documented valuation file that captures the full cost story consistently.
How quickly should a company involve trade counsel when tariffs change?
When the company is considering changes to classification, origin, valuation, routing, intermediaries, or product descriptions in response to tariff pressure, that is the moment to bring counsel in.
The goal is not to slow the business down. The goal is to make sure the company is not solving a cost problem by creating an evidence problem.
