Tariff evasion risks escalate

With the latest round of US tariffs driving up the cost of imports from key markets, businesses are under increasing pressure to find ways to protect their margins. However, authorities on both sides of the Atlantic are stepping up enforcement against tariff evasion, with aggressive use of tax, customs, and criminal law.

Regulators now view tariff evasion including undervaluation, transshipment, and false classification through the same lens as tax fraud. Companies that mis-declare imports to reduce duty exposure face significant penalties, reputational harm, and criminal sanctions.

Consider a company that imports consumer electronics from a high-tariff country. To reduce duties, it falsely declares the goods under a tariff code for “educational devices” or “components” that carry lower rates, or records only half the true value on invoices. These schemes may save millions, but if discovered, they become textbook cases of tax fraud.

In March 2025, a federal court sentenced a Florida couple to nearly five years in prison for defrauding the US government of over $42 million in tariffs by routing Chinese plywood through Malaysia and falsifying documentation. That same month, a flooring company based in San Francisco agreed to pay $8.1 million to settle allegations it falsely declared Chinese-manufactured flooring as Malaysian to evade antidumping and Section 301 duties.

Across the Atlantic, enforcement is just as robust. In February 2025, a UK-based company agreed to pay over £3.2 million to HMRC in a compound settlement for exporting military-listed goods without the necessary licences; the largest of three settlements totalling £3.7 million in Q1 2025. Meanwhile, in December 2024, a major sports brand’s headquarters in Germany were raided as part of an investigation into alleged customs and tax evasion exceeding €1.1 billion, spanning Germany and Austria.

What importers need to know

The US’s new tariff regime, effective from April 2025, imposes a 10% baseline tariff on all imports, with significantly higher rates, and “stackable” duties, for many countries.

This has intensified scrutiny of declarations, valuations, and sourcing practices. Authorities are particularly focused on red flags such as:

• Misrepresented country of origin
• Deliberate undervaluation of shipments
• Mis-classification to lower-duty categories

In the US, the False Claims Act allows for treble damages and heavy penalties for knowingly underpaid duties. In the EU, the Directive on Administrative Cooperation (DAC6) imposes mandatory disclosure obligations where cross-border arrangements obscure the jurisdiction, value, or nature of goods.

In the UK, the Criminal Finances Act creates strict liability offences for failing to prevent the facilitation of domestic or foreign tax evasion. Companies can be found guilty even if unaware of wrongdoing unless they can demonstrate that they had “reasonable procedures” in place.

Logicall’s Role

Our customs experts in the UK, EU, and US provide a critical line of defence, helping importers maintain compliance without losing competitiveness. We support our clients through:

• Strengthening supplier and supply chain stakeholder due diligence
• Reviewing tariff classifications and valuation methodologies
• Identifying and escalating potential compliance issues early
• Maintaining clear, auditable documentation for customs and tax authorities

Compliance must now keep pace with changing global trade dynamics. Proactive engagement with our customs experts is essential to minimise risk, protect reputation, and maintain your operational resilience.