President Donald Trump has frequently referred to himself as "Tariff Man." So, it’s no surprise that tariffs are at the top of the agenda for his new Administration. Trump has already aggressively imposed tariffs on a broad range of imported goods, including those from China, Canada, and Europe. These tariffs—sometimes sudden and sweeping—have disrupted global supply chains and significantly increased the cost of imported goods.

As certain as the sun will rise, Trump’s tariffs will lead to new schemes for evading them. Some unscrupulous importers, looking to protect their bottom lines, will resort to fraudulent means to avoid paying the full amount of duties owed. The False Claims Act (FCA) provides a powerful tool for the federal government to combat customs fraud, with whistleblowers playing a critical role in exposing these deceptive practices.

The Government’s Interest in Stopping Tariff Evasion

The U.S. government has long prioritized customs enforcement. But in recent years, it has increasingly turned to the FCA to address tariff evasion. The FCA allows private individuals, known as relators, to file qui tam lawsuits on behalf of the government against companies that knowingly underpay customs duties. These whistleblowers are also eligible for significant financial rewards—typically 15–30 percent of the recovered amount.

At a recent conference, Michael Granston, a senior official in the Department of Justice (DOJ) responsible for administration of the FCA, discussed the Trump Administration’s commitment to aggressively enforcing the FCA across various industries—and specifically emphasizing that the FCA has been and will continue to be a powerful tool in combating tariff evasion. Given that nearly all the government’s FCA recoveries result from cases brought by whistleblowers, Granston’s remarks make clear that the government seeks to actively partner with whistleblowers who provide inside information on customs fraud schemes.

Common Methods of Customs Fraud

Dishonest importers looking to evade tariffs have used a variety of deceptive tactics. The most common include:

• Undervaluation: Importers deliberately understate the value of goods on customs forms to reduce the amount of duties owed. This can be by falsifying the quantity or price of goods, undervaluing goods bought from related parties, or making make improper claims under the “first sale rule.”
• Misclassification: The duty rate for a good depends on its code under the Harmonized Tariff Schedule, as well as the good’s country of origin. Dishonest importers may “misclassify” or falsely describe a product using tariff codes with lower duty rates.
• Transshipment: Products are routed through third-party countries to disguise their true country of origin and avoid country-specific tariffs.
• Falsifying Country of Origin: Importers falsely claim that goods originate from a country with lower or no tariffs rather than from the actual manufacturing location.

DOJ’s Crackdown on Customs Fraud Under the False Claims Act

In recent years, the DOJ has been increasingly active in pursuing trade-related FCA cases involving customs fraud. Some have resulted in significant monetary recoveries for the government and substantial whistleblower awards. Below are some notable recent examples:

-  Alexis LLC, a womenswear brand, paid $7.6 million in 2024 to settle allegations that it underreported the value of imported apparel and the customs duties owed on such articles. Whistleblower Partners represented the whistleblower, who received $1,456,503.

-  Precision Cable Assemblies and Global Engineered Products, two Wisconsin-based companies that sold wiring and power distribution products, paid more than $10 million in 2024 to settle allegations it used a false-invoice scheme to undervalue goods imported from China. The whistleblower received $1,260,000.

-  International Vitamins Corporation, a vitamins and nutritional supplements manufacturer, paid $22.8 million in 2023 for misclassifying thousands of products imported from China. The whistleblower received more than $4.5 million.

-  Linde GmbH, a multinational corporation headquartered in Germany, and its U.S. subsidiary paid $22 million in 2020 to settle allegations that they misrepresented the nature, classification, and valuation of industrial equipment it imported. The whistleblower received $3.7 million.

-  Stargate Apparel, an apparel company, and their former owner agreed to pay $6 million in to settle allegations that they used false invoices to underreport the true value of imported goods. The government also brought criminal charges against the companies’ former owner.

These cases underscore the government’s commitment to using the FCA to combat customs fraud and the importance of whistleblowers in bringing these schemes to light.

Whistleblowers: The Key to Exposing Customs Fraud

Whistleblowers play a crucial role in customs fraud enforcement because they have access to insider knowledge that the government would otherwise struggle to obtain. Employees at importing companies, customs brokers, freight forwarders, and others in the supply chain may witness fraudulent practices firsthand.

Successful FCA cases involving customs fraud are often brought by companies to stop unscrupulous competitors who break the law to get an unfair business advantage. Honest companies that expose customs fraud not only help to level the playing field but also earn a substantial award that goes directly to their bottom line.

For any would-be whistleblower, though, navigating an FCA case is complex and requires experienced legal counsel. Those considering blowing the whistle on customs fraud should consult with an attorney who specializes in the FCA to ensure their rights are protected and their case is as strong as possible.

Conclusion

As tariffs continue to be the main tool in U.S. trade policy, tariff evasion will inevitably follow. The government has demonstrated a strong commitment to using the FCA Act to crack down on customs fraud, and whistleblowers are essential to this enforcement effort.

The attorneys at Whistleblower Partners have significant experience representing whistleblowers in customs cases. If you would like to understand your options and potentially take action to hold wrongdoers accountable while earning a substantial reward, please contact us for a confidential consultation.