As rising operating costs and unpredictable tariffs take a greedy bite out of U.S. importers’ margins, bad actors are increasingly attempting to illegally import “below-market, industry-destabilizing goods” without paying duties. This fraudulent activity creates a two-tier pricing structure for imported products: higher prices for buyers and sellers unwilling to engage in fraud, and lower prices for those parties turning to transshipping, mislabeling, and misdeclaring merchandise to evade tariffs.

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In addition, unscrupulous parties are attempting to smuggle prohibited items (i.e., dangerous, restricted, or adversarial materials) into the U.S., bypassing critical screening protocols and violating public health, safety, intellectual property rights, and national security laws. 

In response to the growing problem of tariff evasion, smuggling, and importation of goods made under unsafe and exploitative conditions, the current administration is now treating trade fraud as a national and economic security imperative. The first step in its enforcement strategy was the launch of the cross-agency Trade Fraud Task Force (TFTF) in August 2025, signaling an aggressive escalation in how tariff evasion and trade compliance investigations would be handled moving forward.

The TFTF brings together the Department of Justice (DOJ) — notably, both criminal and civil decisions — the Department of Homeland Security (DHS), and other agencies 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.” 

Enforcement intensifies 

In advancement of its America First Trade Policy, the current administration is doubling down on trade fraud enforcement in 2026, building on TFTF success through aggressive new enforcement initiatives, legal strategies, and cross-agency cooperation. Indeed, the DOJ is continuing to lay down the hammer, recently selecting the Chicago U.S. Attorney’s Office, which has extensive experience in criminal trade fraud cases and oversees a major U.S. transportation hub, to be a lead partner on the TFTF. 

U.S. Attorney Andrew S. Boutros will prosecute bad actors who commit customs violations, forced labor, and tariff evasion using “duty and penalty collection actions under the Tariff Act of 1930, actions under the False Claims Act (FCA), and, where appropriate, parallel criminal prosecutions, penalties, forfeitures, and seizures.”

The DOJ is also welcoming FCA filings via its expanded Corporate Criminal Whistleblower Awards Pilot Program. The e-Allegations program encourages the trade community and general public to report suspected trade violations to U.S. Customs and Border Protection (CBP). As an added incentive for calling out fraud, whistleblowers in FCA qui tam cases are entitled to shares of up to 30% of any funds recovered.

Data-driven fraud investigations

U.S. authorities are increasingly using data analytics tools and artificial intelligence (AI) to conduct audits and detect anomalies that signal evasion, helping investigators to “see through shell games” that previously obscured fraudulent conduct. 

Data analytics, coupled with inter-agency data sharing, enable the TFTF to identify illicit tariff evasion schemes, including undervaluation, misclassification, transshipment, antidumping and countervailing duty violations, illegitimate shell companies, and “double dipping” (claiming more than one tariff exemption). 

Recommended actions for importers

With the DOJ’s decisive shift of tariff fraud into the civil and criminal realm, the days of laissez-faire enforcement are gone. In their place is an aggressive cross-agency enforcement environment with the budget, resources, and technology to root out and prosecute fraudulent trade activity on a comprehensive scale. 

Manual workarounds, whether “creative” Harmonized Tariff Schedule (HTS) code choices, aggressive tariff mitigation strategies lacking robust documentation, or opaque supplier structures, are more likely than ever to be detected and challenged, potentially resulting in criminal, financial, and reputational damages. 

Against the backdrop of fast-changing tariffs, complex multi-jurisdictional rules, and growing scrutiny of “duty engineering,” businesses need to treat import tariffs as a core compliance risk, not just a finance issue. Supply chain leaders should prioritize the following trade management factors to mitigate compliance risk:

1. HTS classification governance: Centralized, documented HTS decision process; integrated HTS classification code software; version-controlled rulings and justifications.
2. Origin and routing transparency: End-to-end visibility into supply chains; verified bills of materials; clear evidence supporting origin and Free Trade Agreement claims. 
3. Valuation controls: Documented transfer pricing rationale; reconciled invoice, payment, and declared values; exception monitoring. 
4. Broker and 3PL oversight: Clear service-level expectations; periodic audits of brokers and logistics partners; alignment on HTS and origin rules.
5. Internal monitoring & remediation: Data-driven testing of entries; dashboards highlighting anomalies; structured process for corrections and prior disclosures. 

As the DOJ escalates trade fraud enforcement efforts, businesses need to fully understand their supply chain risk and put the right systems and tools in place to respond swiftly to unpredictable trade policy without cutting corners. With a data-driven compliance strategy — supported by technology that automatically keeps pace with ever-changing tariffs, sanctions, and export controls — importers can create a robust, audit-ready compliance program that satisfies TFTF scrutiny and mitigates tariff volatility to sustain the profitable cross-border flow of goods.