Key Takeaways
On Saturday, President Trump signed executive orders imposing stiff tariffs on three of the United States’ biggest trading partners. The orders impose a 25 percent tax on most imports from Canada and Mexico, while goods from China will be charged a 10 percent import tax. The tariffs were issued pursuant to the International Emergency Economic Powers Act (IEEPA), citing “[t]he extraordinary threat posed by illegal aliens and drugs, including deadly fentanyl, [which] constitutes a national emergency.”
Tariff enforcement has traditionally been handled as a civil matter under the False Claims Act (FCA). However, given the centrality of tariffs in President Trump’s broader economic, immigration and national security agendas, it is likely that the U. S. Department of Justice (DOJ) will be tasked with criminal enforcement of tariff evasion, to punish egregious instances of wrongdoing and to provide a powerful general deterrent to both U.S. and foreign businesses.
Criminal Statutes That Will Be in Play
While willful FCA violations may be charged criminally under 18 U.S.C. Section 287, that is unlikely to be the statute of choice for law enforcement and federal prosecutors tasked with criminal tariff enforcement. In the alternative, the following statutes are likely to be featured prominently in upcoming criminal actions that address underreporting the value of imports, misrepresenting the country of origin, misclassifying imports, and other common tariff-evasion techniques.
The IEEPA
Compliance professionals and litigators who are familiar with economic sanctions enforcement are familiar with the International Emergency Economic Powers Act (IEEPA), a 1977 law that allows the president to declare a national emergency and block or prohibit transactions that threaten U.S. national security or foreign policy interests. Traditionally, the IEEPA has been used to impose sanctions, freeze assets and restrict imports and exports to address the declared emergency.
Criminal enforcement of sanctions using the IEEPA has been common in recent years. Because the government must prove that a defendant acted willfully – that is, with knowledge that their conduct is unlawful – to sustain a criminal conviction, such cases rarely proceed to trial. Indeed, given the high burden of proof, the government must find overwhelming evidence of guilt before seeking an indictment on such charges. The same would hold true in the context of a criminal tariff enforcement case charging a violation of the IEEPA. Criminal violations of the IEEPA are punishable by up to 20 years’ imprisonment.
As the IEEPA does not explicitly mention tariffs and has never before been used for that purpose, many have speculated that the Trump tariffs could face constitutional challenges, as a variety of congressionally authorized statutes address the imposition of tariffs. For example, opponents may argue that the President’s use of the IEEPA exceeds the scope of the authority granted by Congress or that it violates existing trade agreements or constitutional principles, such as the Commerce Clause, which grants Congress the power to regulate interstate and foreign commerce. However, challenging any criminal IEEPA charges on this basis is unlikely to be successful given the scope of the IEEPA and historical precedent for its use, as the rationale of protecting national security from foreign threats provides a basis for imposing tariffs in the same way it does to issue sanctions, block access to the U.S. financial system, and restrict exports of sensitive technology.
Using Traditional Criminal Statutes to Enforce Tariffs
The IEEPA is not the only tool that law enforcement can use for criminal tariff enforcement. Indeed, a range of conventional statutes can easily be used for this purpose.
Perhaps the broadest, most versatile statute is the general conspiracy statute, 18 U.S.C. Section 371, which creates an offense “[i]f two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose.” The statute proscribes any conspiracy to “impair or impede” the lawful functions of the federal government and does not require the government to prove that the conspirator committed any other offense. These so-called “Klein Conspiracies” are frequently used to address tax evasion and have been featured prominently in recent criminal sanction and export control enforcement cases. Violations of the statute carry a possible prison sentence of up to five years.
Similarly, the government could likely charge any tariff evasion scheme as a wire fraud conspiracy under 18 U.S.C. Sections 1343, 1349. Tariff evasion is transnational by its very nature, so it is difficult to conceive of a fact pattern that would not involve an actionable interstate or foreign wire communication such as a bank transaction, a phone call, an email or a text message. Penalties for committing or conspiring to commit wire fraud are typically up to 20 years’ imprisonment, and can reach 30 years if the violation affected a financial institution.
The DOJ can also criminally investigate and prosecute tariff evasion using the smuggling statute, 18 U.S.C. Section 545, which carries a sentence of up to 10 years in prison. Indeed, the DOJ has already done so – in United States v. Esquijerosa, the government brought criminal smuggling charges against a Florida businessman who had Chinese-origin goods transshipped through third countries to avoid tariffs. The defendant ultimately pled guilty to violating 18 U.S.C. Section 371 on December 6, 2024.
Given the expansive use of long-arm jurisdiction by U.S. authorities, foreign individuals and companies need to be mindful of their potential exposure under these statutes. A single wire transaction or use of a correspondent bank has been sufficient to establish jurisdiction over non-U.S. defendants in a variety of circumstances, and tariff enforcement actions promise to be no different.
Who Will Investigate Tariff Evasion?
These and other criminal statutes are likely to be used by the DOJ to aggressively enforce the Trump tariffs, and the investigative and prosecutorial infrastructure is already in place for them to do so.
Tariff enforcement is generally the province of U.S. Customs and Border Protection (CBP), which falls under the Department of Homeland Security (DHS). CBP’s internal guidance requires it to refer any possible criminal violation to the relevant U.S. Attorney’s Office for further investigation and possible prosecution, with no requirement of notice to the alleged offender. Beyond this, the Disruptive Technology Strike Force (DISTECH), a joint venture that was created in February 2023 to prevent the proliferation and illegal acquisition of sensitive technologies by nation-state adversaries, can quickly be repurposed for tariff enforcement. Active in more than 10 major U.S. cities, DISTECH combines the resources and personnel of DHS, the Federal Bureau of Investigation (FBI) and the Department of Commerce (DOC) with federal prosecutors to investigate and prosecute sanctions evasion and export control cases. DISTECH has been successful in fostering interagency cooperation, streamlining these otherwise complex transnational criminal investigations. The same agencies, personnel and investigative techniques will be applicable to investigating possible tariff violations.
Conclusion
Economic countermeasures to further national security objectives – including sanctions, export controls and now tariffs – are likely to continue driving the DOJ’s criminal enforcement priorities. Even where investigations do not result in criminal charges, they can be referred for civil or regulatory action. Given the administration’s commitment to the use of tariffs, the heightened enforcement environment and increased collaboration among law enforcement, regulators and prosecutors, companies should consider proactive steps to mitigate potential risk of both criminal and civil exposure. These steps may include training, audits and reporting mechanisms, as well as taking advantage of the DOJ’s voluntary disclosure programs.
