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International trade

U.S. Customs Enforcement Under the Trump Administration: A Review of FCA Enforcement and Liability

Strategic Insights

— 2 min read

The past few months have seen a rapid-fire series of developments in U.S. trade policy, particularly with respect to the imposition of tariffs on a wide range of foreign-origin goods imported into the United States. This has led to increased costs and supply chain uncertainty for importers, suppliers, and other parties involved in international trade. As a result, the enforcement of U.S. Customs laws by the U.S. Customs and Border Protection (CBP) has become a pressing concern. The Federal False Claims Act (FCA), a key tool in the U.S. Department of Justice's (DOJ) enforcement arsenal, is being "aggressively" enforced against fraudulent actors that cause the government to lose revenue through import tariffs or other means.

Key Takeaways:

  • The FCA may apply to cases where a party has knowingly avoided making owed payments to the government, including Customs duties for imported goods, in addition to cases involving fraudulent claims of payment.
  • Common forms of Customs violations that may lead to a DOJ investigation and prosecution under the FCA include misclassification of goods, undervaluation of merchandise, country of origin fraud, and false duty-free claims.
  • The FCA imposes significant penalties on violators, including treble damages and statutory fines per each false claim made, and can arise out of administrative investigations initiated by CBP or whistleblower reports.
  • Recent FCA cases, including the Barco Uniforms and Evolutions Flooring cases, demonstrate the trend towards more frequent application of the FCA to Customs-related cases and highlight the importance of maintaining efficient and effective internal compliance programs and reporting lines to mitigate risks associated with whistleblower actions and increased enforcement.
  • Parties with knowledge of an importer's activities and business, such as former employees and business competitors, can become effective whistleblowers in situations where an importer is involved in an illicit scheme to avoid payment of Customs duties.

Statistics:

  • The number of FCA cases initiated by whistleblowers reached a record high in 2024. (Source: U.S. Department of Justice, Civil Division, Press Release: False Claim Act Settlements & Judgments Exceed $2.9B in Fiscal Year 2024, January 15, 2025)
  • The DOJ has entered into settlements with several companies, including Evolutions Flooring, Inc. and its owners, to resolve allegations of Customs duties evasion. (Source: U.S. Department of Justice, Press Release: Evolutions Flooring Inc. and Its Owners to Pay $8.1 Million to Settle False Claims Act Allegations Relating to Evaded Customs Duties, March 25, 2025)
  • In the past fiscal year, the DOJ has obtained over $2.9 billion in settlements and judgments under the FCA. (Source: U.S. Department of Justice, Civil Division, Press Release: False Claim Act Settlements & Judgments Exceed $2.9B in Fiscal Year 2024, January 15, 2025)

Sources:

  • U.S. Department of Justice, Civil Division, Press Release: False Claim Act Settlements & Judgments Exceed $2.9B in Fiscal Year 2024, January 15, 2025, https://www.justice.gov/archives/opa/pr/false-claims-act-settlements-and-judgments-exceed-29b-fiscal-year-2024
  • U.S. Department of Justice, Press Release: United States Files Complaint Against Barco Uniforms & Suppliers, April 18, 2025, https://www.justice.gov/opa/pr/united-states-files-complaint-against-barco-uniforms-and-its-suppliers-alleging-false-claims
  • U.S. Department of Justice, Press Release: Evolutions Flooring Inc. and Its Owners to Pay $8.1 Million to Settle False Claims Act Allegations Relating to Evaded Customs Duties, March 25, 2025, https://www.justice.gov/opa/pr/evolutions-flooring-inc-and-its-owners-pay-81-million-settle-false-claims-actallegations

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