Import Tariffs are back in the spotlight—not just as a cost line, but as an enforcement trigger.

On December 18, 2025, the U.S. Department of Justice (DOJ) announced that a North Carolina-based distributor of tungsten carbide products agreed to pay $54.4 million to settle False Claims Act (FCA) allegations tied to evaded customs duties. The alleged conduct reads like a “Tariff Evasion playbook”: country-of-origin misrepresentation, Harmonized Tariff Schedule (HTS) misclassification, and failure to pay marking duties.

In an era where Trade Tariffs can shift quickly—through policy changes, court challenges, and geopolitical pressure—companies are increasingly tempted to push “tariff mitigation” beyond what compliance can defend. This settlement is a reminder that when import strategy outruns import controls, enforcement risk accelerates.

• Import Tariffs errors can become FCA exposure—not just a customs penalty—when authorities view duty underpayment as knowingly avoiding an obligation.
• DOJ is scaling tariff enforcement via a cross-agency Trade Fraud Task Force, pairing civil tools (FCA) with criminal pathways where appropriate.
• Tariff Evasion patterns authorities flag most often include origin manipulation/transshipment, HTS code gaming, and undervaluation—especially for China-linked supply chains.
• Whistleblowers are a force multiplier: the tipster’s share in this case was approximately $9.75M, reinforcing incentives to report trade fraud.
• Modern HTS Code Lookup and Management + HTS Code Software are now risk controls, not just productivity tools—because speed without accountability and auditability is a liability.

According to DOJ, the company agreed to pay $54.4M to resolve allegations that it knowingly and improperly failed to pay duties on tungsten carbide products imported from China. The government alleged three core issues:

1. Country-of-origin misrepresentation (transshipment)
DOJ alleged that from August 2020 through March 2024, the company knew certain goods were manufactured in the People’s Republic of China, were transshipped to Taiwan, and were then declared to U.S. Customs and Border Protection (CBP) as Taiwan-origin to avoid Section 301 duties.

2. Tariff classification misstatement (HTS misclassification)
DOJ further alleged that from May 2015 through March 2024, the company misclassified products under HTS 8311.90.00 (Free) rather than HTS 8209.00.00 (4.6% ad valorem), reducing duties owed.

3. Failure to pay marking duties
Finally, DOJ alleged that from May 2019 through March 2024, certain imported merchandise was not properly marked with country of origin and the company failed to pay required marking duties prior to distribution in the U.S.

The settlement agreement states the $54.4M includes $27.2M in restitution, plus interest at 5.0% per annum from September 2, 2025. (As with most settlements, the agreement notes the claims resolved are allegations and not a determination of liability.)

Tariff volatility changes behavior. When Import Tariffs rise sharply—or when new Trade Tariffs appear with limited lead time—companies feel immediate margin pressure. Some respond with legitimate Tariff Mitigation Strategies. Others drift into decisions they can’t document, defend, or consistently execute.

At the same time, enforcement capacity and coordination are expanding:

• • DOJ launched a cross-agency Trade Fraud Task Force in August 2025 to pursue tariff evasion and related trade fraud, explicitly referencing FCA actions and parallel criminal prosecutions where appropriate.

• • A DOJ Criminal Division memo in May 2025 formally prioritized “trade and customs fraud, including tariff evasion,” and expanded whistleblower focus to include “trade, tariff, and customs fraud by corporations.”

• • Legal reporting and law-firm analyses, including from Morgan Lewis, point to an active pipeline of tariff-evasion cases and more aggressive interagency enforcement postures. See also this U.S. customs enforcement article from Reuters.

Related Content: Import Tariffs Now a Top Enforcement Priority in the U.S.

Meanwhile, the broader trade environment remains unsettled. For example, the U.S. Supreme Court has agreed to decide a high-profile case affecting the legality of certain tariffs—exactly the kind of legal uncertainty that complicates global supply chain planning. The result: more pressure + more scrutiny. This settlement sits right at the intersection.

The alleged conduct in the tungsten carbide case maps directly to these three categories: origin, HTS classification, and marking duties.

One reason scrutiny is intensifying is simple: tariffs and duties are major revenue generators and a major policy lever.

Below is an illustrative snapshot of duty/tax/fee collection figures cited in analysis of CBP statistics by Wiley Law (showing a step-change in the amounts being collected).

CBP duty/tax/fee collection ($ billions)

FY2023 | ████████████████████████  ~92

FY2024 | ██████████████████████    ~88

FY2025; as of Jun 30, 2025 | ██████████████████████████████████  >136

Note: the U.S. fiscal year starts October 1

In a volatile tariffs environment, many importers revisit cost strategy. The key is to separate defensible Tariff Mitigation Strategies from Tariff Evasion risk.

Generally defensible strategies (when properly documented):

• Binding rulings on classification and origin (reduces ambiguity before entry)
• First sale (where legally available and properly structured)
• Foreign trade zones (FTZs) and duty drawback (when operationally feasible)
• Supplier diversification and lawful origin shifts (with real manufacturing change)
• Product engineering that changes classification because the product truly changed

High-risk “strategies” that tend to trigger investigations:

• Declaring an origin that doesn’t match manufacturing reality (including “pass-through” routing)
• Reclassifying at scale without technical support, especially when “free” duty is the outcome
• Ignoring marking requirements (or treating them as a downstream packaging issue)

This is exactly why HTS Code Lookup can’t be a one-off exercise but an ongoing initiative—and why HTS Code Software needs governance, workflow, and audit trails, not just search.

If tariff volatility is pushing your organization to revisit sourcing, classification, and landed cost models, a practical approach is to run a targeted “tariff controls sprint”:

1. Build a single source of truth for classification and duty factors
Centralize HTS classifications, supporting rationale, and change control. Misclassification is one of the most common—and preventable—failure points.

2. Treat origin as an evidence-based determination, not a field on a document
Origin should link to manufacturing steps and supplier attestations that can withstand scrutiny—especially for goods potentially affected by Section 301 or Antidumping (AD) and Countervailing Duties (CVD).

3. Align brokers, procurement, and product teams on “one classification, one rationale”
Discrepancies across entry filers are easy to spot with analytics—and increasingly easy for agencies to cross-reference.

4. Calibrate your process for auditability
DOJ has emphasized enforcement focus and whistleblower pathways; a clean compliance narrative matters earlier than many teams assume.

In a world where Import Tariffs can swing quickly and enforcement tools are sharper, importers need both accuracy and defensibility—at scale.

The Descartes CustomsInfo solution supports that by helping teams:

• Perform faster, more consistent import classification management tools with AI-enabled systems and embedded trade content
• Maintain centralized HTS Code Software workflows, classification rationale, and change history
• Track duty impacts tied to evolving Trade Tariffs (including complex add-on tariffs and program rules)
• Reduce risk from misclassification and documentation gaps by improving consistency across products, suppliers, and brokers
• Operationalize Tariff Mitigation Strategies with stronger governance—so “savings” don’t become enforcement exposure

Descartes also helps brokers use analytics and exception monitoring to spot compliance risks early, simplify audits and corrections, strengthen alignment with importers, and operate as trusted compliance partners in a heightened enforcement environment. This data-driven approach supports stronger service level agreement (SLA) alignment with importers, and positions brokers as trusted compliance partners rather than transactional filers.

The bottom line: tariff volatility isn’t just a cost problem. It’s a controls problem. And this $54.4M settlement shows what happens when tariff strategy moves faster than trade compliance.