2/4/2025 Update: President Trump has temporarily halted the implementation of tariffs on Canada and Mexico for 30 days. The new tariff on Chinese imports is now in effect, as of today. We will continue to update, as necessary.
Summary
In his first two weeks back in office, President Donald Trump signaled his administration will impose new tariffs as part of his economic agenda, urging businesses to comply with U.S. trade policies to avoid severe penalties for tariff evasion. Recent cases and settlements highlight the significant legal and financial risks of noncompliance.
The Upshot
- The Trump administration's renewed emphasis on tariffs, including a 25 percent tariff on products from Canada and Mexico and an additional 10 percent on imports from China, has significant implications for businesses importing goods to the United States.
- Companies could face severe civil or criminal penalties for failing to comply with U.S. tariff policies, as evidenced by recent prosecutions and settlements for tariff evasion, such as false country-of-origin claims and underreporting import values.
- Businesses should implement strong protocols to ensure accurate reporting of product origins and values, particularly for industries like steel, aluminum, and agriculture, which are likely to be most impacted by future tariff changes.
The Bottom Line
The Trump administration's ongoing tariff agenda significantly impacts businesses that import goods into the United States. Companies must take proactive steps to comply with U.S. tariff regulations, as noncompliance can lead to severe civil and criminal penalties, as seen in recent legal cases. To mitigate risks, Ballard Spahr’s White Collar Defense and Investigations Group can assist businesses with reviewing their import practices and navigating the complex and evolving regulatory environment.
In his first two weeks back in office, President Donald Trump has continued to signal that his administration will use tariffs as a key component of his economic agenda. In a series of social media announcements, President Trump announced plans to impose 25 percent tariffs on products imported from Canada and Mexico, as well as an additional 10 percent tariffs on products imported from China.
While plans are subject to change, the Trump administration’s focus has critical implications for businesses that import goods to the United States. International companies should take steps to evaluate what protocols are in place for complying with federal laws and regulations regarding tariffs in order to reduce any potential risk of civil or criminal exposure for tariff evasion. Recent cases brought by the Department of Justice highlight the significant cost that companies and business leaders may face if they fail to comply with U.S. tariff policies.
In March 2024, the U.S. Attorney’s Office for the District of Puerto Rico charged the president of a mosaics company for falsely representing to Customs and Border Protection (CBP) officials that porcelain tile imports originated from Malaysia when, in actuality, they were manufactured in China and shipped to Malaysia before they were imported to the U.S. For his efforts to avoid tariffs on Chinese imports, he was ordered to pay restitution of more than $1 million and was sentenced to two years of probation.
In December 2024, the U.S. Attorney’s Office in the Southern District of Florida charged a truck tire importer for a similar scheme. The importer pled guilty to providing false and fraudulent invoices to CBP when he routed his imports from China through third countries, including Canada and Malaysia, and claimed that the tires originated from those countries in an effort to avoid tariffs on Chinese imports. The importer is awaiting sentencing but faces a maximum penalty of up to five years in prison.
Several recent settlements under the False Claims Act demonstrate the civil risk companies may face for failure to comply with tariff policies. In August 2024, a women’s apparel company paid $7.6 million for underreporting the value of its imports. In November 2023, a tools manufacturer paid nearly $2 million when it falsely labeled their tools as made in Germany to avoid tariffs on Chinese imports. And in August 2024, two Wisconsin companies paid more than $10 million to resolve allegations that they misrepresented the value of their goods imported from China to reduce their tariff obligations.
Given the Trump administration’s indications that it intends to impose additional tariffs on imports from multiple global trading partners, corporations who import products should keep in mind the importance of complying with U.S. trade policies and put quality check protocols in place to ensure compliance in this rapidly evolving arena. Even simple, unintentional reporting mistakes could result in significant monetary consequences for companies that are not in compliance with federal law.
Guidance and regulations can be confusing, particularly when new administrations have different regulatory agendas, but companies are advised to take a proactive approach to compliance with current and planned regulations. For certain industries most likely to be affected by tariff increases, companies should take steps to ensure they are properly reporting country of origin and value of goods, particularly if imports are routed through other countries before being imported to the United States. For example, current regulations dictate that the country of origin for steel imports should be reported as where the steel was poured. Other industries expected to be affected by a new wave of tariffs, such as aluminum, computer chips, agriculture, and auto parts, should employ experienced counsel and evaluate whether their procedures are fully in compliance with U.S. law.
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