A Fundamental Shift in Trade Fraud Enforcement
On August 29, 2025, the U.S. Department of Justice and the Department of Homeland Security jointly announced the formation of a cross-agency Trade Fraud Task Force (TFTF). The Task Force was built to bring together DOJ's Criminal and Civil Divisions alongside DHS's enforcement arms — including U.S. Customs and Border Protection (CBP) and Homeland Security Investigations (HSI) — with a mandate to aggressively pursue tariff evasion, customs fraud, smuggling, and related misconduct. This was not an incremental update. DOJ Criminal Division Senior Counsel Cody Matthew Herche, the newly appointed head of the TFTF, used his first formal remarks in February 2026 to announce a "fundamental shift" in how the government approaches trade fraud. For decades, companies treated trade compliance as a back-office filing exercise. That framing is now obsolete. The DOJ has made clear that unfair trade practices deprive the government of lawful revenue, expose domestic competitors to an uneven playing field, and — in cases involving misdescribed or prohibited goods — pose direct threats to public health and national security. The Task Force was established against a backdrop of sweeping tariff activity under the Trump Administration's America First Trade Policy, including reciprocal tariffs on nearly every trading partner and active Section 232 investigations covering semiconductors, metals, minerals, and pharmaceuticals. The scale and pace of these changes have created complexity that some importers may be tempted to exploit — and the TFTF was created precisely to eliminate that temptation through credible, aggressive enforcement.
The DOJ is no longer content with civil settlements — it is actively pursuing criminal charges against individuals and companies, backed by advanced data analytics and whistleblower incentives.
One of the most significant signals from the TFTF is the pivot toward criminal enforcement. The DOJ is prioritizing criminal statutes including 18 U.S.C. sections 541, 542, and 545, making clear that trade fraud penalties are not simply a cost of doing business. Companies that fail to come forward and cooperate now face a heightened risk of criminal resolution rather than a civil settlement. Individual accountability is equally central to the Task Force's mission. Herche stressed that companies only act through individuals — if an importer of record is cutting corners, it is because a person directed them to do so. The case of Global Plastics illustrates the stakes: the company's former CEO pleaded guilty to conspiracy to smuggle goods, with sentencing scheduled for June 2026. DOJ's enforcement record is already substantial, with $140 million recovered to date, substantially more in the pipeline, and record False Claims Act recoveries of $6.8 billion in 2025 alone. Data analytics is a core weapon in the TFTF's arsenal. Investigators are using advanced tools to identify anomalies in import patterns — flagging sudden shifts in country of origin, mismatches between purchase orders and customs data, and suspicious changes in the importer of record. Herche described these capabilities as allowing investigators to "see through shell games" that previously obscured fraudulent conduct. The DOJ has also broadened its Corporate Whistleblower Awards Pilot Program to include trade, tariff, and customs fraud, actively encouraging domestic companies to report competitors who gain unfair advantages through evasion schemes. Qui tam provisions of the False Claims Act further empower private whistleblowers to file suits on behalf of the government and share in any recovery.
Enforcement will span misclassification, transshipment, valuation fraud, forced labor violations, and smuggling — across all industries with global supply chains.
The TFTF has identified specific patterns of misconduct it is prioritizing. These include misclassification of goods to underpay duties, transshipment schemes designed to obscure true country of origin, fraudulent undervaluation of imports, drawback abuse, circumvention of antidumping and countervailing duties, and smuggling of prohibited or counterfeit goods. Industries historically vulnerable to these practices — including steel, aluminum, textiles, electronics, and plastics — are under particular scrutiny, but no sector is exempt. Beyond tariff evasion, the TFTF is also collaborating with the Forced Labor Enforcement Task Force. With an estimated 27 million people trapped in forced labor globally, generating $236 billion in illegal profits, the DOJ views falsified supply-chain audits as using the same mechanisms as tariff evasion — making these two enforcement areas deeply interconnected. Willful blindness by importers who ignore red flags in their supply chains will not be tolerated. The Task Force operates through coordination between DOJ litigators from both Criminal and Civil Divisions, working alongside CBP and HSI. Enforcement actions may run in parallel — meaning a company could simultaneously face criminal charges, civil FCA suits, and administrative penalties. Settlement sizes have grown substantially, with multi-million dollar resolutions now reflecting the full scope of harm. Recent examples include an $8.1 million settlement for a San Francisco-based wood flooring importer that falsified country of origin, a $6.8 million settlement for a plastics resin importer that failed to pay Section 301 duties, and a $12.4 million settlement for a Dallas-based quartz countertop supplier that mislabeled Chinese-origin products.
Proactive compliance investment is the most effective defense — and the window to act before enforcement escalates further is narrowing.
The DOJ has been explicit: there is a path forward for companies that discover fraud in their supply chains and come forward. Voluntary disclosure under the Corporate Enforcement Policy and mandatory disclosure mechanisms under the Federal Acquisition Regulation provide legitimate avenues for cooperation that can lead to declinations or substantially reduced penalties. The Global Plastics matter resulted in a corporate-level declination precisely because the company self-disclosed, cooperated, and remediated — even as its former CEO faces criminal sentencing. Companies with international supply chains should treat this moment as an urgent call to action. A supply chain risk assessment is the logical starting point — examining country-of-origin determinations, HTS classification practices, transshipment risks, valuation methodologies, and the integrity of supplier documentation down through multiple tiers. Internal controls should be designed to flag anomalies: cost structures that do not reflect tariff increases, abrupt changes in preferred sourcing countries, and discrepancies between purchasing records and customs filings. Compliance programs must also be calibrated to this heightened environment, with particular attention to whistleblower exposure. A single disgruntled employee or a competitor aware of evasion practices can trigger a qui tam action that the DOJ will then pursue aggressively. Robust internal reporting channels, prompt investigation of allegations, and well-documented remediation efforts are no longer optional features of a compliance program — they are essential defenses. As Herche framed it, if a company would not allow a sanctioned entity onto its ledger, it cannot afford to allow a tariff evader into its warehouse. The cost of inaction now is far greater than the investment required to get compliance right.
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