Common Types of Tariff Evasion

Federal Criminal Exposure for Importers and Trade Professionals

Tariff evasion is increasingly treated as a serious federal crime rather than a mere customs compliance issue. With sweeping new tariffs imposed on imported goods, U.S. enforcement agencies have dramatically intensified scrutiny of international trade practices.

Agencies such as U.S. Customs and Border Protection, Homeland Security Investigations, and the Department of Justice are aggressively pursuing cases involving intentional efforts to evade duties owed to the United States.

While many customs violations are resolved administratively, willful tariff evasion frequently results in criminal prosecution, asset forfeiture, and potential imprisonment.

Your best hope of avoiding the worst outcomes is with a skilled federal criminal defense attorney experienced at Eisner Gorin LLP in such matters.

To schedule a consultation, call (818) 781-1570 or contact us here.

What Is Tariff Evasion?

Tariff evasion occurs when an importer knowingly uses deceptive practices to avoid paying lawful duties. Once intent is established, the matter escalates from a regulatory violation into federal criminal territory—often involving charges such as customs fraud, wire fraud, conspiracy, and violations of the False Claims Act.

Most Common Forms of Tariff Evasion That Trigger Criminal Charges

Misclassification of Goods (HTS Code Manipulation)

Every imported product must be assigned a correct Harmonized Tariff Schedule (HTS) code. Criminal misclassification occurs when an importer intentionally declares goods under an incorrect code to reduce or eliminate duties.

Common examples include:

Declaring finished products as “parts”
Classifying specialized steel as generic mechanical tubing
Using outdated or intentionally incorrect tariff headings

Prosecutors focus on knowledge and intent, not innocent clerical mistakes.

Undervaluation of Imported Merchandise

Many tariffs are assessed on an ad valorem basis, meaning they are calculated as a percentage of the declared value.

Criminal undervaluation schemes often involve:

Double invoicing (one invoice shown to Customs, another reflecting the true price)
Side payments outside official records
Related-party pricing manipulation
Inflated freight or service charges to mask the true product value

Evidence of undisclosed payments or parallel accounting systems is frequently used to prove intent.

False Country of Origin (Illegal Transshipment)

Country-of-origin declarations directly affect duty rates—particularly for goods subject to punitive tariffs, such as those imposed on China.

Illegal transshipment involves:

Shipping goods through a third country with lower tariffs
Minimal processing, such as relabeling or repackaging
Falsified origin documentation

If the processing does not constitute a substantial transformation, the declaration is unlawful.

Evasion of Antidumping and Countervailing Duties (AD/CVD)

Antidumping and countervailing duties can exceed 100% of a product's value, making them a primary enforcement focus.

Criminal cases commonly involve:

Transshipment to avoid AD/CVD rates
Misdescription of covered products
False certifications to Customs

Industries frequently targeted include steel, aluminum, solar products, and cabinetry.

Smuggling and Non-Declaration

Smuggling occurs when goods are imported without proper declaration or inspection. Unlike paperwork violations, smuggling almost always results in criminal charges and forfeiture.

Use of Shell Companies or Straw Importers

One of the strongest indicators of criminal intent is the use of shell entities to act as importers of record.

These schemes involve:

Creating temporary or insolvent companies
Importing goods and accruing large duty liabilities
Dissolving the entity before duties can be collected

Authorities routinely pierce these structures, charging the individuals behind them with conspiracy, wire fraud, and customs fraud.

Key Takeaways for Importers and Executives

Misdeclaring origin, value, or classification can trigger criminal liability
Transshipment schemes are a top enforcement priority
AD/CVD evasion carries especially severe penalties
Shell companies strongly indicate intent to defraud
Penalties may include treble damages, forfeiture, and imprisonment

Defenses Against Federal Tariff Evasion Charges

A strong defense requires a detailed understanding of both customs law and federal criminal statutes. Common defenses include:

Lack of Willful Intent

Tariff regulations are complex. The government must prove intentional deception—not negligence or misunderstanding.

Reliance on Professional Advice

Good-faith reliance on licensed customs brokers or trade consultants can undermine allegations of criminal intent.

Legal Ambiguity

If a product reasonably fits multiple HTS classifications, ambiguity is often resolved in favor of the defendant in criminal cases.

Substantial Transformation

In transshipment cases, technical evidence may establish that processing in the intermediary country legally changed the product's origin.

Speak With a Federal Criminal Defense Attorney

If you are under investigation or facing allegations related to tariff evasion, early legal intervention is critical. These cases move quickly and often involve parallel civil and criminal proceedings.

The federal criminal defense attorneys at Eisner Gorin LLP have extensive experience handling complex customs and trade fraud investigations.

📞 Call (818) 781-1570 for a confidential case evaluation.

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Types of Tariff Evasion