Heightened Enforcement Risks and Opportunities in International Trade
At A Glance
On April 2, 2025, the Trump Administration imposed a sweeping new set of tariffs against imported goods as part of its efforts to remake the framework for international trade. As these new tariffs come online, and as the administration works to renegotiate trade agreements and expand the use of antidumping and countervailing duties, companies engaged in international trade—including importers, exporters, customs brokers, and freight forwarders—face heightened enforcement risks. And with the rise in the use of the False Claims Act (FCA) to combat customs fraud, importers are far more likely to face investigations today than in years past, as whistleblowers and competitors alike seek to police the marketplace.
The Basics: Importing Products into the United States
More than 30 years ago, Congress recognized that US Customs & Border Protection (“CBP”) did not have the resources to police the countless shipments of goods that entered the country every year. Accordingly, Congress revamped the customs laws to impose on importers of record an affirmative obligation to exercise reasonable care when importing products into the United States.1
Ever since, importers have been obligated to take steps to ensure that all imported goods are completely and accurately described and valued on Custom Form 7501,2 invoices, and bills of lading, and that all applicable duties, antidumping duty deposits (ADDs), and countervailing duty deposits (CVDs) are paid at the time of importation.3
In practice, this means that importers should take steps, such as consulting trade professionals, researching trade publications, or making inquiries to government agencies, to ensure, among other things, that they: (i) accurately and completely describe the products on Form 7501 and commercial invoices; (ii) enter the products under the correct HTS Code; (iii) appropriately value the products; (iv) identify the products’ country of origin; and (v) pay any applicable duties, tariffs, antidumping duties, or countervailing duties at the time of importation.
The Evolving Enforcement Landscape
Importers who fail to take reasonable steps to ensure the accuracy of the information they provide to the government face civil enforcement risks. Historically, most such actions proceeded under 19 U.S.C. § 1592, which allows the government to recover fines and penalties when it establishes that an importer avoided duties as a result of negligence, gross negligence, or fraud. But while Section 1592 actions can be powerful—for example, an automotive company was held liable for more than $20 million in penalties in a Section 1592 proceeding—the statute has been underutilized, in part because only the DOJ may bring claims under Section 1592, and it may do so only in the US Court of International Trade.4
The enforcement landscape is rapidly changing, however. In recent years, importers have faced growing risks due to a steady rise in the use of the FCA to combat customs fraud. The FCA is the government’s premier anti-fraud statute: it allows the government to recover treble damages plus penalties of up to $28,619 for each violation. Furthermore, the FCA not only allows private parties to litigate fraud claims on behalf of the government, it incentivizes them to do so: parties who successfully bring such actions are entitled to 15-30% of the government’s recovery, as well as attorneys’ fees and costs.
Most commonly, internal whistleblowers initiate FCA actions, but others may do so as well. In the customs space, several FCA actions have now been filed by domestic manufacturers. In these actions, domestic manufacturers have alleged that importers have evaded tariffs, duties, or antidumping duties. For example, on behalf of one company, Mayer Brown filed an FCA case against several defendant-competitors, alleging that they had evaded an antidumping duty on Chinese steel products. Several defendants settled. One went to trial. In October 2021, Mayer Brown won a $27 million trial verdict against that defendant in federal court in Los Angeles.
The FCA is emerging as a potent weapon against customs fraud. For example, in 2020, a global gas and engineering company and its US subsidiary agreed to pay the United States over $22 million to resolve allegations that the company avoided paying duties owed on the companies’ imports when it knowingly made false statements on customs declarations. And in 2024, two Wisconsin-based companies paid over $10 million to resolve allegations that they submitted false invoices to CBP, evading customs duties in violation of the FCA.
Most recently, last week, the Justice Department announced an $8.1 million settlement in a customs-related FCA case brought against a flooring company for allegedly evading customs duties by causing false information to be submitted to CBP regarding the manufacturers’ identity and the products’ country of origin.
DOJ has taken notice of these developments. Earlier this year, at the Federal Bar Association’s annual qui tam conference, the Deputy Assistant Attorney General for the Commercial Litigation Branch announced that the Trump Administration intended to “aggressively” utilize the FCA as an enforcement tool against those who attempt to evade customs duties owed to the US government. Thus, we expect a substantial uptick in FCA cases alleging that importers avoided duties by misrepresenting a product’s country of origin, undervaluing imported products, misrepresenting the HTS code, or falsely claiming that products were not subject to applicable antidumping duties.
Implications for Businesses Involved in or Affected by International Trade
Virtually every business in the United States will be impacted by the emerging changes to US trade policy.
For those who are involved in importing products, the proliferation of tariffs and ADDs will make compliance more challenging. Importers should act now to develop policies and procedures to ensure that they proactively identify and account for new tariffs and ADDs. For example, importers should consider implementing compliance manuals, training relevant employees, auditing import records, subscribing to information services, and regularly consulting trade counsel or other customs experts. Importers who receive a Civil Investigative Demand from the DOJ regarding their imports should immediately retain counsel skilled in these investigations.
By contrast, the proliferation of tariffs and ADDs/CVDs may give domestic manufacturers new opportunities to enforce the US trade laws. Domestic manufacturers who suspect that competitors are avoiding tariffs or ADDs may wish to consider whether they might be positioned to file an FCA action. While such an action should not be filed lightly, a domestic manufacturer that has strong evidence of duty evasion should consult counsel to assess whether the time, costs, and stress associated with pursuing an action might be appropriate.
How Mayer Brown Can Help
Mayer Brown’s International Trade and Litigation & Dispute Resolution practices feature battle-tested lawyers who have helped companies to comply with customs laws for decades. Clients benefit from our experience navigating antidumping and countervailing duty proceedings, defending companies facing fraud investigations, and helping domestic manufacturers to protect their interests through strategic litigation. Mayer Brown is well-positioned to guide companies through this newly risky environment and to help domestic manufacturers vindicate their right to compete on a level playing field.
1 See United States Customs Modernization Act, 19 U.S.C. § 1484.
2 CBP Form 7501 is the form used by importers to make representations to CBP about their products. The “Entry Summary” on Form 7501 is relied upon by CBP to determine relevant information such as the appraisement, classification, and origin of the imported products. This form is a legal declaration of imported merchandise and helps the CBP calculate the duties, taxes, and fees owed by the importer.
3 Antidumping duties are additional tariffs levied on imported merchandise that foreign producers or exporters sell into the United States at below-normal value. CVDs are additional tariffs levied when foreign governments provide foreign manufacturers with subsidies or other assistance, enabling them to export and sell merchandise into the United States more cheaply than domestic manufacturers. ADDs and CVDs are designed to ensure foreign merchandise is being sold into the United States at a fair market value, and both are common. For example, the Government enforced 274 ADD/CVD orders in 2015. By 2021, that number had nearly tripled, to 633 ADD/CVD orders. Avoidance of ADDs and CVDs also appears to be substantial. CBP’s 150 audits of imports of ADD/CVD commodities in 2021 identified $568 million of discrepancies. See U.S. Customs and Border Protection, Antidumping and Countervailing Duties: Priority Trade Issue (June 2022).
