The first seven weeks of the second Trump Administration has revealed that tariffs are going to be a primary tool in the administration’s trade arsenal to address both domestic and foreign trade policy goals. What is critical to understand is that tariffs are only a viable tool if U.S. Customs and Border Protection (“CBP”) can properly enforce and collect those tariffs.

The False Claims Act (“FCA”) might be increasingly used by the administration to enforce trade goals. Attorney General Bondi, during her confirmation hearing, noted that she believed the FCA is important. And of the President’s Executive Orders (“Ending Illegal Discrimination and Restoring Merit-Based Opportunity”), specifically directs the head of every agency to include contractual language referencing the FCA in every contract or grant award. So, it is clear the new administration views the FCA as an enforcement tool, and it can be expected that it will use it in enforcing its trade priorities as well.

At the time of entry every importer completes an entry summary form commonly known as the Form 7501. This form is the first line of defense for the government to ensure the accuracy of a several facts including but not limited to – the country of origin, the exporting country, the name of the manufacturer, the commercial value of the goods entering the United States, and the classification of the goods that are being entered. Furthermore, the importer (or its broker acting as its agent) signs the Form 7501 and attests to the factual accuracy of all the information provided. Failure to provide accurate information is a violation of 19 U.S.C. §1592(c) and CBP has the authority to impose penalties due to negligence, gross negligence, or fraud.

The issue with the imposition of tariffs is that it also encourages creative behavior that the government might assert constitutes evasion. Certain categories of evasion are clear-cut: mislabeling goods, disguising the country of origin by transshipping goods through third countries, and improper classification to avoid higher duties. But other activities which the government may assert constitute evasion are not so clear-cut; for example, it is not always obvious whether a given product fits into a class of products subject to a specific tariff or duty, or, for some products, what the proper country of origin is. Nevertheless, the prevention of evasion is a priority for CBP. When importers file forms that relate to their obligation to pay money to the government, if those forms contain false statements made with actual knowledge of falsity, deliberate ignorance of truth or falsity, or even reckless disregard of falsity, FCA liability could arguably be triggered.

The FCA is being used with increasing frequency to combat alleged evasion against importers of goods into the United States. In some cases, these suits may be brought directly by the government. In other cases, the qui tam provision of the FCA may be used by private parties such as competitors to file complaints under seal (commonly known as qui tam actions) alleging FCA violations. The Department of Justice then has a statutory duty to investigate such claims and may intervene in the case. Even non-intervened cases or those that are ultimately dismissed may, therefore, result in lengthy and costly government investigations.

It’s important to keep in mind that the FCA is a civil and not a criminal statute. As a result, in an FCA case there is a lower burden of proof than in a criminal case, and a broader definition of the requisite mental states required to impose liability. Another nuanced aspect of the FCA’s reach is who can be considered to have participated in the making of a false claim. With regard to tariffs, the FCA does not only apply to the importer of record but may also reach companies that assist in the purported fraudulent importation or who assisted in the preparation or filing of customs forms. As for monetary consequences, the FCA provides for both treble damages as to tariffs that would have been owed to the government, as well as per-claim penalties.

The DOJ, under the new administration has affirmed that it will utilize the FCA to bolster and buttress its trade enforcement initiatives. Importers should, therefore, be mindful of any tariff mitigation or duty mitigation strategies they employ while navigating the new tariffs that have been announced and instituted since January 20, 2025.

One case to pay attention to is a pending appeal in the United States Court of Appeals for the Ninth Circuit in Island Industries v. Sigma Corp.. In that case the appellant argues that any penalty imposed by U.S. Customs and Border Protection under 19 U.S.C. §1592 is the exclusive remedy for the United States resulting from the evasion or obligation to pay duties. The secondary question in this appeal is whether the district court as a court of general jurisdiction or the specialized Court of International Trade has exclusive jurisdiction to handle FCA cases stemming from a failure to pay duties. Any decision on this issue will not be binding in district courts outside the Ninth Circuit unless and until the United States Supreme Court decides the issue.

Given the increased enforcement stance surrounding the accurate payment of duties and tariffs on all imported goods coupled with an increasingly complicated tariff regime under the new administration, importers should be aware of their risk of liability including possible exposure under the FCA.

If you have specific questions about this article, please contact Nithya Nagarajan or Robert Romashko. Husch Blackwell’s International Trade and Supply Chain Team and White Collar teams are continually monitoring these developments and will provide updates.