Expect Greater Criminal Enforcement of Tariff Laws, Attorneys Say
DOJ under President Donald Trump likely will pursue greater criminal enforcement of the most recent tariffs imposed on China to serve as a "general deterrent" and "punish instances of serious misconduct," attorneys at BakerHostetler said in a recent post. In response, foreign parties should be "mindful of their potential criminal exposure," partners Artie McConnell, Jennifer Solari and Michael Snarr said.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
The new tariff action, which imposed a universal 10% tariff on all goods from China, took effect on Feb. 4 (see 2502030034). The BakerHostetler attorneys said that while enforcement of the new duties likely would occur under the False Claims Act as a "civil matter," enforcement of evasion of the new tariffs is "likely" to fall under the purview of the DOJ, the attorneys said.
In addition, the post indicated that the Disruptive Technology Strike Force, which was created in 2023 to prevent the proliferation of sensitive technologies by "nation-state adversaries," can "quickly be repurposed for tariff enforcement." The strike force combines the resources of DHS, the Commerce Department and federal prosecutors to pursue sanctions evasion and export control matters.
McConnell, Solari and Snarr said the new administration most likely will turn to the International Emergency Economic Powers Act -- the statute under which the tariffs were imposed -- and traditional criminal statutes to enforce the duties. The attorneys said that IEEPA has traditionally been used to impose, and criminally enforce, economic sanctions, with criminal violations of the law punishable by up to 20 years in prison.
Since the government must show that the violator acted "willfully" in order to uphold a criminal conviction, IEEPA sanctions violations "rarely proceed to trial," and the government must find "overwhelming evidence of guilt before such seeking an indictment," the attorneys said. The same would be true of tariff violations, the release said.
The BakerHostetler attorneys added that charges of general conspiracy, wire fraud conspiracy and smuggling could be used by DOJ to go after tariff evaders. Under the general conspiracy statute, DOJ often goes after parties that "impair or impede" the "lawful functions of the federal government," the release said. These "Klein Conspiracies" are used to "address tax evasion and have been featured prominently in recent criminal sanction and export control enforcement cases," the release said.
McConnell, Solari and Snarr added that the government already has shown a penchant for using the smuggling statute, citing a recent case in which the U.S. charged a Florida businessman with smuggling after he transshipped Chinese-origin goods through third countries to avoid tariffs. The businessman pleaded guilty in December 2024 and faces up to 10 years in prison -- the maximum under the statute.
Nathan Rickard, partner at Picard Kentz, noted to us that tariff enforcement hasn't been a priority across multiple administrations, citing some government antidumping and countervailing duty enforcement reports that reveal millions of dollars in uncollected AD/CVD. For instance, where AD/CVD rates are increased during an administrative review, CBP only collects 30% of the total amount owed, leaving $4.5 billion in duties uncollected.
Rickard said DOJ inaction on the duty evasion has "encouraged the development of organizations that offer services to assist businesses in evading payment of duties owed." And while legislation has been introduced to "create the structures within the DOJ to facilitate enforcement of trade laws," it has yet to pass both houses of Congress, he said.