Tariff fraud enforcement targets importers over alleged duty evasion

The federal government is widening its crackdown on tariff evasion and customs fraud, with recent actions targeting auto parts, aluminum, steel and rail components as importers face heightened scrutiny over country-of-origin claims, product classifications and declared customs values.

The cases show how tariff enforcement is increasingly moving through multiple channels: False Claims Act lawsuits, whistleblower complaints, bankruptcy claims, settlements and U. S. Customs and Border Protection (CBP) investigations under the Enforce and Protect Act.

The largest recent case involves First Brands Group, the bankrupt auto-parts supplier, which is facing a $285. 5 million claim from the U. S. government in its Chapter 11 case. The government alleges First Brands undervalued goods imported from China to avoid paying higher duties.

According to a report from The Wall Street Journal, the Justice Department claim stems from a previously sealed whistleblower lawsuit filed in 2022 against First Brands, its brake parts and centric parts divisions, and a Chinese subsidiary, Longkou Haimeng Machinery.

The lawsuit alleged that after First Brands acquired the division in 2020, it “systematically slashed” the prices it reported paying to the Chinese division for auto components.

The whistleblower complaint alleged First Brands cut transfer prices declared to CBP by roughly 32%, lowering tariff obligations even as manufacturing costs rose globally and the company raised prices to customers. The government is seeking repayment through the bankruptcy process while continuing to investigate the allegations.

Aluminum settlement tops $549M In another major customs enforcement action, California-based Perfectus Aluminum Inc. , Perfectus Aluminum Acquisitions LLC and four affiliated warehousing companies agreed to pay $549. 5 million to resolve False Claims Act allegations tied to evaded antidumping and countervailing duties on aluminum extrusions from China.

Federal prosecutors alleged the companies improperly avoided duties on more than 2. 2 million aluminum extrusions by misrepresenting them as finished “pallets” not subject to duties.

The Justice Department said the pallets were simply aluminum extrusions spot-welded together to appear functional, and that no customers existed for the pallets between 2011 and 2014. Canadian steel firms settle for $19M The Justice Department also announced a $19 million settlement with Canada-based Farjess Inc. , Royal Canadian Steel Inc.

and Feroz Jessani, part-owner and president of the companies. Federal officials alleged the defendants knowingly misrepresented the country of origin of flat-rolled steel imported into the U. S. from May 2019 through January 2025.

The government said the steel was manufactured in China, Indonesia, Italy, Turkey or Vietnam, but was declared to CBP as originating in Canada or the U. S.

CBP finds evasion in Greenbrier rail coupler case CBP also issued a notice of determination as to evasion in EAPA Case 8183, filed by the Coalition of Freight Coupler Producers against The Greenbrier Companies.

CBP said substantial evidence showed Greenbrier entered Mexican-origin and Chinese-origin freight rail couplers and parts without declaring entry for merchandise subject to antidumping and countervailing duty orders. CBP said no formal entries were filed and no cash deposits were applied at the time of entry.

As part of the enforcement action, CBP said it will suspend or continue to suspend covered entries, require formal entries for freight rail couplers attached to railcars and require Greenbrier to rectify noncompliance tied to couplers that entered the U. S. during the period of investigation.

Greenbrier disputed CBP’s determination, saying it was “disconnected from the real-world functioning” of the North American rail network and could disrupt cross-border rail operations.

The company said railcars routinely move across borders as mobile transportation equipment under long-standing customs practices and said it is evaluating administrative and judicial review options. South Texas businessman pleads guilty to customs fraud In a separate case highlighting increased customs enforcement along the U. S.

-Mexico border, South Texas businessman Mauro Esteban Garza Torres pleaded guilty May 28 to submitting fraudulent customs paperwork tied to exports of heavy equipment to Mexico, according to the Border Report. Federal prosecutors alleged Garza prepared multiple invoices showing different sales values, including lower-priced invoices submitted to U. S.

and Mexican customs authorities to reduce taxes and tariffs. According to court documents, Garza admitted participating in a conspiracy to report fraudulent sales prices, including reporting equipment sold for $145,000 as having a value of $43,500.

Garza, owner of Hidalgo, Texas-based GMT Machinery, faces up to 20 years in federal prison and is scheduled to be sentenced Aug. 5. Trump targets tariff evasion in new policy push The cases also a