On December 18, 2025, the DOJ-DHS Trade Fraud Task Force announced three enforcement actions that recovered over $100 million in a single afternoon. Here's what it is, who it's targeting, and the seven steps every importer needs to take now.
It started with a press release that rattled the trade compliance world.
On December 18, 2025, the Department of Justice announced three simultaneous resolutions from its newly formed Trade Fraud Task Force. Three companies. Three schemes. One afternoon. Over $100 million recovered.
A tungsten carbide manufacturer: $54.4 million for falsely declaring Chinese-origin goods as Taiwanese to dodge Section 301 duties. An automobile parts importer: $53 million for evading antidumping and countervailing duties. A San Francisco importer: $8.1 million for falsifying country of origin across multiple tariff programs. And alongside the civil settlements, a corporate COO pleaded guilty to criminal charges for directing employees to misrepresent country of origin on CBP Form 7501.
This wasn't a coincidence. It was a message.
What Is the Trade Fraud Task Force?
In August 2025, the Department of Homeland Security and the Department of Justice launched a joint Trade Fraud Task Force, staffing it with 40 dedicated attorneys drawn from DOJ's Criminal Division, Civil Division, and federal prosecutors' offices. The task force operates in coordination with U.S. Customs and Border Protection and Homeland Security Investigations.
Its mandate: aggressively pursue importers who evade tariffs through misclassification, origin fraud, transshipment, and undervaluation — using every legal tool available, including the False Claims Act, criminal smuggling statutes, and civil penalty provisions of the Tariff Act.
What makes this task force different from prior enforcement regimes isn't just the staffing. It's the toolkit.
Three distinct enforcement tracks run in parallel:
- CBP Civil Penalties under 19 U.S.C. § 1592 — negligence to fraud, up to 8x the unpaid duty
- False Claims Act (FCA) civil suits — treble damages plus up to $27,000 per false statement
- Criminal prosecution under 18 U.S.C. § 545 (smuggling) — up to 20 years in federal prison
Prior enforcement mostly lived in track one. The task force has explicitly activated all three — and has shown it will target senior executives personally, not just corporate entities.
Transshipment: Target Number One
Every single one of the December 2025 enforcement actions involved country-of-origin misrepresentation, specifically the routing of Chinese-manufactured goods through third countries to conceal their true origin.
This pattern — producing goods in China, shipping through Vietnam, Taiwan, Malaysia, or Cambodia, and declaring the intermediate country as origin — has been the dominant tariff evasion scheme since Section 301 tariffs were first imposed in 2018. The task force has made it explicit priority number one.
In July 2025, an executive order created a new "transshipment tariff" category: any goods determined by CBP to have been transshipped to evade duties are subject to a 40% tariff rate, replacing whatever country-specific rate would have applied. Additionally, CBP has been directed to apply "no mitigation or remission" on transshipment penalties — meaning the usual avenues for reducing civil fines are foreclosed.
On August 15, 2025, CBP announced a single enforcement action targeting transshipped Chinese goods that resulted in $400 million in duty evasion enforcement. That is not a typo.
How CBP Is Detecting Transshipment in 2026
The technology picture has changed dramatically. In 2025, CBP awarded contracts to AI supply-chain mapping firms — including a high-profile contract with Exiger — to access commercial data points that cross-reference:
- Bill of lading histories across shipping routes
- Supplier registration data in foreign countries
- Production capacity analysis (can a "Taiwan manufacturer" actually produce this volume?)
- Corporate ownership networks linking foreign entities to Chinese parent companies
The same technology importers use to map their own supply chains is now being used against them. If your goods pass through a country with limited manufacturing capacity for your product category, or if your supplier has a corporate structure that traces back to a Chinese parent, CBP's AI models are likely flagging your shipments.
The False Claims Act: The Risk You're Not Thinking About
Most customs compliance programs focus on CBP penalties. The False Claims Act is a different animal entirely, and the task force has made clear it will deploy it aggressively.
Here's what makes the FCA so dangerous:
Whistleblower bounties of up to 30%. Any employee, competitor, or former supplier who has evidence of customs fraud can file a sealed "qui tam" complaint and collect up to 30% of whatever the government recovers. Their attorneys' fees are paid by you. Even participants in the fraud can qualify. The incentive structure is aggressive.
A six- to ten-year statute of limitations that begins tolling from when the sealed complaint is filed — not when you committed the act. A qui tam complaint filed today could cover conduct going back to 2016. CBP reported 1,200 e-Allegations investigations in 2025 alone.
Treble damages. The FCA doesn't just recover unpaid duties. It imposes three times the amount of the fraud, plus per-claim penalties. On a $10 million duty evasion scheme, you're looking at $30 million in damages plus up to $270 million in per-entry penalties.
The $54.4 million Ceratizit settlement — the largest of the December announcements — reportedly involved a qui tam complaint filed by a relator. The company had been misrepresenting origin for years. The complaint was filed, sealed, and investigated before anyone at the company knew they were a target.
Who Is Actually Getting Targeted?
Based on the enforcement actions to date, the task force is prioritizing:
| Target Profile | Risk Factors |
|---|---|
| Heavy goods with Chinese supply chains | Routed through Vietnam, Taiwan, Malaysia, Thailand, Cambodia |
| AD/CVD-affected product categories | Steel, aluminum, auto parts, solar, seafood, furniture |
| Section 301 List 3/4 goods | Electronics, machinery, apparel, chemical products |
| First-time entrants in high-tariff categories | No prior import history raises red flags |
| Large importers with thin margins | High volume creates high incentive to cut corners |
The task force has also indicated it will look beyond the importer of record. Customs brokers who helped structure entries, compliance managers who approved questionable classifications, and freight forwarders who arranged transshipment routing are all potentially liable as knowing participants.
The 2015 Problem: How Far Back Are You Exposed?
The Ceratizit settlement is a cautionary tale. DOJ noted in the announcement that the alleged misconduct dated back to 2015 — a decade of misrepresentation.
The relevant statute of limitations under the Tariff Act is five years. Under the False Claims Act, it's six to ten years, running from when a sealed complaint is filed. This means that an importer who cleaned up their compliance program in 2022 after the Section 301 exclusion process expired could still face FCA liability for entries going back to 2016 — if a whistleblower filed a sealed complaint in 2024.
There is no safe harbor for past conduct unless you disclosed it proactively.
The Self-Disclosure Option
One of the December 2025 settlements — the $6.8 million plastic resin case — involved a company that self-disclosed after an internal investigation uncovered wrongdoing. DOJ specifically highlighted this in the announcement.
Prior Disclosure to CBP under 19 C.F.R. § 162.74 provides significant penalty mitigation when an importer voluntarily discloses potential fraud before CBP initiates a formal investigation. The key requirement: the disclosure must come first.
Prior Disclosure vs. Doing Nothing
| Scenario | Exposure |
|---|---|
| No violation | No liability |
| Violation, Prior Disclosure | Reduced civil penalties, typically 1x unpaid duties |
| Violation, discovered by CBP | Civil penalties up to 8x unpaid duties |
| Violation, criminal referral | Personal criminal liability, potential imprisonment |
| Violation, qui tam whistleblower | FCA treble damages + per-claim penalties |
The window for voluntary disclosure is closing as CBP's AI-targeting systems get better. Companies that have historical classification or origin issues should be conducting internal audits now, not after receiving a CF-28 Request for Information.
Seven Steps to Protect Your Company
Step 1: Conduct a Transshipment Audit
Map every product back to its actual country of manufacture — not just the country of export or country of last substantial transformation as declared on entry. For products with Chinese manufacturing anywhere in the upstream chain, document the substantial transformation analysis.
Questions to answer:
- Where are the raw materials sourced?
- Where does each stage of manufacturing occur?
- Can your supplier provide mill certificates, production records, and factory audits?
- Does the supplier's production capacity match your import volume?
Step 2: Review High-Risk HTS Classifications
Pull your last 24 months of entry data. Flag entries where:
- The duty rate seems low relative to competitors importing similar goods
- Classification decisions were made without binding ruling support
- The HTS code has been the subject of recent CBP audit focus (electronics, apparel, auto parts)
- You changed classifications without formal legal analysis
Step 3: Vet Your Suppliers' Corporate Structures
For suppliers in Vietnam, Cambodia, Malaysia, and other Southeast Asian countries that saw manufacturing investment surge after 2018, conduct entity-level due diligence. Specifically:
- Who owns the manufacturing facility?
- When was it established?
- Does the parent company have Chinese ownership?
- What goods did this supplier produce before 2018?
CBP's Exiger contract gives the agency access to commercial databases that answer these questions. You should answer them first.
Step 4: Implement Supply Chain Monitoring
Static supplier audits conducted annually are no longer sufficient. The task force environment requires:
- Continuous monitoring of UFLPA Entity List additions
- Transaction screening against Office of Foreign Assets Control lists
- Country-of-origin verification at the purchase order level, not just at the entry level
- Documentation retention for seven years minimum (FCA statute of limitations)
Step 5: Review Your Customs Broker Relationship
Your customs broker is an extension of your compliance program. Understand:
- What is their quality control process for classifications?
- Are they flagging potential origin issues or just processing entries?
- Do they have errors and omissions insurance?
- What is their documentation retention policy?
A customs broker who is helping you structure entries to minimize duty exposure without proper legal analysis is not protecting you — they may be creating shared liability.
Step 6: Establish an Internal Whistleblower Channel
One of the best defenses against external qui tam actions is an internal process for employees to raise compliance concerns confidentially. Companies with functioning internal ethics hotlines that result in genuine investigations and remediation are substantially better positioned in FCA cases because they can demonstrate good faith compliance efforts.
Step 7: Consider Prior Disclosure for Historical Issues
If your internal audit reveals historical classification or origin errors, consult with trade counsel immediately about whether Prior Disclosure makes sense. The calculus: the cost of voluntary disclosure (typically 1x unpaid duties plus interest) versus the expected value of an undisclosed FCA action or criminal referral.
This is not a decision to make without legal counsel. But it is a decision to make now, not after CBP sends a request for information.
What's Coming in the Rest of 2026
The task force is not slowing down. DOJ has indicated that 2026 will bring:
- Expanded criminal referrals targeting corporate officers and compliance managers personally
- New enforcement actions focused on first-sale valuation fraud
- Increased focus on AD/CVD evasion in the seafood, furniture, and solar sectors
- Potential prosecution of customs brokers who knowingly participated in fraudulent entries
With CBP's AI targeting systems generating more automated referrals and the whistleblower bounty creating a growing pool of informants, the days when a poorly documented classification decision could quietly sit in an entry summary are over.
The task force's December message was clear: the cost of being caught now vastly exceeds the cost of fixing it proactively.
Get Ahead of the Risk
Identifying your exposure starts with understanding your entry data — which HTS codes you're using, what duty rates you're paying, and where your supply chains originate. TariffLens helps importers and customs brokers classify goods accurately, audit historical entry patterns, and build defensible documentation for high-risk classifications.
The time to understand your exposure is before the task force does.
Start your free classification audit with TariffLens
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Trade compliance decisions, particularly those involving potential prior disclosure or voluntary self-correction, should be made in consultation with qualified trade counsel.