Late last week, the U.S. Department of Justice announced the launch of the Trade Fraud Task Force “to bring robust enforcement against importers and other parties who seek to defraud the United States.” The Task Force will combine resources and expertise from the DOJ’s Civil and Criminal Divisions and the Department of Homeland Security “to aggressively pursue enforcement actions against any parties who seek to evade tariffs and other duties, as well as smugglers who seek to import prohibited goods into the American economy.”
The Task Force arises out of the current administration’s “America First Trade Policy” and its current tariff regime. Also implicated is Executive Order 14243, which is aimed at “enhancing the Government’s ability to detect overpayments and fraud” and calls for increased inter-agency data sharing towards that end.
The Trade Fraud Task Force will work closely with U.S. Customs and Border Protection and Homeland Security Investigations. It will also rely on referrals from the Criminal Division’s Corporate Whistleblower Program. Possible actions include “duty and penalty collection actions under the Tariff Act of 1930, actions under the False Claims Act, and, wherever appropriate, parallel criminal prosecutions, penalties, and seizures under Title 18’s trade fraud and conspiracy provisions.”
Already this year, the DOJ Civil Division’s Commercial Litigation Branch reached civil settlements with a number of companies over allegations of customs duty evasion for such products as multi-layered wood flooring, plastic resin, extruded aluminum products, and quartz surface products. The stated goal of such actions is to level the playing field for U.S.-based manufacturers against purportedly cheap imports from places like China.
On the same day that the Task Force was announced, the U.S. Court of Appeals for the Federal Circuit held that the International Emergency Economic Powers Act, invoked by the president, does not authorize the imposition of tariffs by executive order; that power belongs to Congress. However, the Court left the tariffs in place to allow time for the president to appeal the decision to the U.S. Supreme Court. Whatever the ultimate outcome as to the legality of the tariffs imposed by executive order, the announcement of the Trade Fraud Task Force indicates that the administration intends to devote considerable resources to enforcing customs duties and tariffs and to work to discourage and punish efforts to evade them.
Smith Gambrell & Russell, LLP is well-positioned to assist manufacturers and importers with customs duties and tariffs, as well as to defend them in the event of a government investigation. Peter M. Crofton and Wm. Parker Sanders in the firm’s Manufacturing practice, and Anthony L. “Tony” Cochran, Thomas D. Bever, and Erin N. Spritzer in our White Collar practice, stand ready to assist with any issues that may arise.