A new filing by the U.S. Department of Justice highlights the government’s growing focus on combatting duty evasion, signaling that federal agencies are stepping up enforcement against companies attempting to sidestep customs laws.
The complaint, brought forward as part of the interagency Trade Fraud Task Force’s ongoing efforts, outlines a series of alleged schemes designed to avoid more than $86 million in duties on over $1.2 billion worth of goods imported into the United States.
According to the DOJ, a foreign manufacturer, one of its owners, and additional employees orchestrated two intertwined evasion tactics:
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False country-of-origin claims through transshipment — by routing goods through a nation with a U.S. free trade agreement and misrepresenting those goods as originating there.
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A scrap-swapping operation — in which U.S. scrap materials were shipped to a third country under the pretense they only needed minor processing, then replaced with entirely new products manufactured elsewhere. Those substituted products were then sent back to the U.S. as if they were of U.S. origin.
The complaint notes that before pursuing the second scheme, one of the companies involved sought clarification through its customs broker. After reaching out to U.S. Customs and Border Protection, the broker was advised that the process would not be verifiable and that transforming U.S.-origin scrap into a finished product overseas would subject the final goods to applicable tariffs. A CBP official described the concept as “treading on thin ice” — but the parties allegedly moved forward regardless.
If convicted, the defendants face severe penalties, including up to 20 years in prison. Financial penalties could reach $250,000 for individuals, $500,000 for the corporation, or twice the financial gain or loss stemming from the violations — whichever amount is greater.
The case reflects a broader trend: regulators are increasingly coordinating across agencies to identify, investigate, and prosecute duty evasion, signaling heightened scrutiny and substantial consequences for companies that attempt to exploit weaknesses in the customs system.
