America Is Making Billions From Catching 'Tariff Cheaters'

Newsweek

2 days ago

Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources.
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Among the most frequently touted upsides of President Donald Trump's tariffs is that they can serve as an additional and substantial source of government revenue.
Ahead of his reciprocal duties being reinstated this week, Trump wrote on Truth Social, his social media platform: "IT'S MIDNIGHT!!! BILLIONS OF DOLLARS IN TARIFFS ARE NOW FLOWING INTO THE UNITED STATES OF AMERICA!"
The Treasury Department has already provided evidence to this effect. Since April, the government has collected around $100 billion in tariff revenues, according to CNN analysis of Daily Treasury Statements, including $30 billion in July alone. Commerce Secretary Howard Lutnick said he believes customs authorities could soon be raking in around $50 billion per month thanks to recent tariff hikes.
The revenue is taken from importers themselves—rather than foreign governments or producers. However, many fear this will eventually result in noticeable price hikes for consumers. Should these taxes succeed in encouraging companies to relocate manufacturing practices to the United States or push consumers away from now costly foreign-sourced goods, the resulting decline in imports would also lead to more meagre tariff revenues.
But another source of revenue is emerging alongside the imposition and dutiful payment of these tariffs—catching tariff cheaters.
U.S. Customs and Border Protection (CBP), the Homeland Security agency responsible for collecting tariffs, told Newsweek it is "aggressively combatting" efforts by businesses to evade the duties. This practice, known elsewhere as customs fraud or tariff "cheating," has been incentivized this year by higher tariffs and the increased reward for skirting these duties.
But catching those engaged in this form of tax evasion has itself become more lucrative. The CBP told Newsweek that in the current fiscal year it has secured "over $27 billion in additional revenue as a result of targeted reviews of 55,004 shipments flagged as high-risk for duty evasion."
This compares to around $668 million accrued in fiscal year 2024, an increase of over 3,900 percent.
Trucks stop at a US Customs and Border Protection inspection facility in Detroit near the Ambassador Bridge, which connects Detroit to Windsor, Canada, on August 1.
Trucks stop at a US Customs and Border Protection inspection facility in Detroit near the Ambassador Bridge, which connects Detroit to Windsor, Canada, on August 1.
Jeff Kowalsky/AFP via Getty Images
What Is Tariff Cheating?
According to litigation attorney Gregory Husisian, partner at Foley & Lardner LLP and chair of the firm's International Trade and National Security Practice, "any element that goes into the tariff calculation can potentially be manipulated by cheating."
In the new, and still rapidly evolving tariff environment, it is up to businesses themselves to establish and correctly declare the goods they are trying to import into the U.S.—a fact that allows for honest mistakes and intentional evasion.
Husisian told Newsweek that the five biggest ways companies could avoid tariffs—knowingly or not—are:
Claiming the wrong country of origin Incorrectly classifying goods Valuing goods incorrectly Falsely claiming a free trade preference Simply failing to pay countervailing or anti-dumping duties, taxes placed on goods sold in the U.S. at unfairly low prices.
Most of these are "much bigger deals under the new Trump tariffs," he added, given the varying rates between countries, as well as the now significant—potentially costly—distinction between being covered by a sectoral duty like those on steel, or a reciprocal country-specific tariff.
How Is the CBP Catching Tariff Cheaters?
According to David Simon, partner and a defense lawyer at Foley & Lardner, the most commonly used tool in penalizing tariff cheaters is the Federal False Claims Act, a broad anti-fraud statute violations that can result in severe civil and, in select cases, criminal penalties.
He told Newsweek that the tariffs have put this statute "on steroids," given violators are forced to pay three times recovery—the amount lost due to the false claim.
Higher tariffs—and higher rewards for catching evaders—has drastically increased the potential return-on-investment for the CBP to step up its anti-cheating efforts.
The agency told Newsweek it is has intensified investigations into those suspected of evading duties, through programs like the Enforce and Protect Act (EAPA). It has also relied on public whistleblowers, who are able to file allegations of tariff cheating through its e-Allegations platform. The CBP said it had received over 2,100 such reports in the current fiscal year for a variety of alleged violations.
Doing so could itself prove lucrative. As Simon told Newsweek, the False Claims Act contains a whistleblower provision, giving those who successfully bring a case to the federal government a percentage of the recovery. Given the higher tariffs in place, this can amount to "really big dollars."
The CBP told Newsweek that attempts to evade owed duties "have always existed, regardless of the tariff environment." However, the issue of tariff cheating has undoubtedly grown in scale given the greater scope of the tariffs themselves.
But understanding how widespread the issue is remains challenging, according to Husisian.
"I don't think even CBP has the full answer to that," he said, acknowledging the perennial problem in such matters: that "they only know the people they've caught."