The DOJ’s shifting focus on trade-related crimes

February 2026  |  SPECIAL REPORT: CORPORATE FRAUD & CORRUPTION

Financier Worldwide Magazine

February 2026 Issue

The US Department of Justice (DOJ) under the Trump administration has shifted focus and resources away from the prior administration’s priorities, such as consumer protection and cryptocurrency regulation, toward significantly enhanced enforcement of the nation’s evolving trade laws. The change has already resulted in several policy initiatives and enforcement actions against a backdrop of rapidly evolving trade relationships, shifting foreign policy dynamics

and ongoing domestic judicial challenges.

Perhaps the only certainty is that more changes will come. However, affected industries will not have the luxury to wait until a steadier state is reached and must proceed with caution considering the substantial penalties that could follow trade law violations in the interim.

President Trump announced his ‘America First Trade Policy’ on 20 January 2025, his first day in office, lamenting ‘unfair and unbalanced trade’. Downstream changes pointing to, implementing or at a minimum directionally consistent with the America First Trade Policy soon followed. In May 2025, the DOJ released a memo revising white-collar enforcement priorities to areas that “will have the greatest impact in protecting American citizens and companies and promoting US interests”, including the “high impact area” of “trade and customs fraud”. Simultaneously, the DOJ increased incentives for cooperation in this area. The DOJ amended its Corporate Whistleblower Awards Pilot Program, allowing for potential awards for tips leading to discovery of “violations…related to trade, tariff, and customs fraud”. In addition, the DOJ provided a clearer, certain path to prosecutorial declinations through an updated Corporate Enforcement and Voluntary Self-Disclosure Policy.

Consistent with its more muscular rhetoric, the DOJ began taking action to respond to alleged trade violations. Days after the policy updates, the DOJ announced a False Claims Act (FCA) settlement agreement with a Connecticut company accused of lying about the origin of Chinese manufactured LED lights to sell them to the federal government. In July, the DOJ filed an FCA complaint against a South Carolina company that allegedly used a double invoicing scheme, in concert with a Chinese exporter, to deceive Customs and Border Protection (CBP) into believing certain office furniture was worth less, thereby avoiding additional import duties. In early August, the DOJ filed a complaint against two Colorado companies alleged to have conspired with Chinese counterparts to hide the origin of Chinese forklifts to avoid tariffs and then profit by selling them to the federal government, falsely representing that they were American made.

Administrative tariff enforcement has also increased. According to CBP, the agency found $400m in unpaid trade duties through Enforce and Protect Act investigations between January and August 2025. One of those involved 23 importers and a “network of Chinese shell companies funneling goods through Indonesia, South Korea, and Vietnam”.

The uptick in enforcement activity coincides with major shifts in personnel and organisational structure. The DOJ Fraud Section’s Major Frauds Unit, previously focused on procurement fraud and market manipulation, is now called the Market, Government, and Consumer Fraud Unit and is refocused on tariff evasion. In August, the DOJ announced the creation of a cross-agency Trade Fraud Task Force conceived to “aggressively pursue enforcement actions against any parties who seek to evade tariffs and other duties, as well as smugglers who seek to import prohibited goods into the American economy”. The Task Force includes personnel from the DOJ’s Civil and Criminal Divisions, as well as the Department of Homeland Security (including US Immigration and Customs Enforcement and CBP). The combination of civil, criminal and administrative personnel under the same umbrella is likely to bring more momentum to the federal authority’s enforcement efforts. These changes are not merely reorganisations but a redirection of greater resources to this area of focus.

While the administration has taken clear and direct steps to pursue its trade agenda through enforcement, it is less clear that these initiatives will endure. The largest thorn in these efforts to reorient trade law and enforcement priorities are challenges by private litigants to the bases for many of the tariffs that have been thus far imposed. President Trump invoked emergency authority, under the International Emergency Economic Powers Act (IEEPA), to impose tariffs on goods from all countries. The emergency, per the administration, is the “unusual and extraordinary threat” constituted by “a lack of reciprocity in our bilateral trade relationships, disparate tariff rates and non-tariff barriers, and US trading partners’ economic policies that suppress domestic wages and consumption”. Several private litigants have already challenged the administration’s ‘Liberation Day’ tariffs, as well as certain additional tariffs imposed on China for its alleged participation in illicit drug trafficking networks.

Further, the US Court of International Trade and the Court of Appeals for the Federal Circuit decided in recent months that the president does not have the authority to impose those ‘Liberation Day’ and ‘trafficking’ tariffs under IEEPA. The judges reasoned that the authority to “regulate” or “prohibit” trade in emergencies, conferred by IEEPA, does not include taxation – a core power of the Congress under the Constitution. They also concluded that, had Congress intended to delegate a core constitutional power to the executive, they would have spoken clearly in IEEPA rather than use vague, capacious terms like “regulate”.

The case is now pending at the Supreme Court, where even justices viewed as conservative appeared sceptical. At oral argument, Justice Gorsuch, a Trump appointee, asked counsel for the US whether the president could “impose a 50-percent tariff on gas-powered cars and auto parts to deal with the unusual and extraordinary threat from abroad of climate change”. The administration conceded that, under their view of the law, the president likely could. Justice Gorsuch later asked whether, under the administration’s theory, Congress could delegate the power to declare war, in addition to the power to levy taxes. Meanwhile, Chief Justice Roberts, a Bush appointee, suggested that the judicial doctrine stating that Congress speaks clearly when it gives away core authority – the Major Questions Doctrine – was directly applicable. However, the administration’s arguments hinge on the non-application of the Major Questions Doctrine in areas of “foreign affairs”. If Justices Roberts and Gorsuch were to join the three Democratic appointees – Justices Kagan, Sotomayor and Jackson – they would have a majority to strike down the president’s ‘Liberation Day’ tariffs. The president would then be left to rely on narrower authorities.

Apart from these legal challenges, the international trade system is extraordinarily complex. For example, transshipping, the process of transferring goods from one mode of transportation to another, plays a central role in international trade. Transshipping is not inherently illegal, yet it is critical to many fraud schemes that seek to circumvent tariffs or otherwise hide the true origin of goods. Northern Trust reports that between February and July 2025, China’s goods exports to the US fell by a cumulative 41 percent year over year, while supplies to ASEAN surged by 43 percent, enabling China to maintain its overall share of outbound trade. Given the entrenchment of the second largest economy, and the extraordinary difficulty, if not impossibility, of shifting global supply chains in mere months, fraudulent transshipping likely explains these changes. US CBP agrees. It notes that the trend of transshipment activity to “circumvent trade measures…is particularly prevalent in industries subject to high antidumping and countervailing duties (AD/CVD), and tariffs on Chinese-origin goods”.

So far, the administration’s best answer has been an executive order purporting to impose additional 40 percent “reciprocal tariff” rates on goods “determined by CBP to have been transshipped” for the purposes of evading tariffs. That executive order invokes IEEPA, among other authorities, and may itself be on thin ice if the Supreme Court decides against the administration. In addition, the administration is striking deals, in the form of joint statements with alleged offender countries such as Vietnam and Malaysia, requiring additional enforcement efforts on their end in exchange for reduced tariff rates.

Despite these headwinds, without question, the DOJ has devoted substantial resources to trade enforcement, and those efforts have already borne fruit. Even if some tariffs are pared by the Supreme Court, or otherwise lost in a logistical morass, market participants should not take such developments as a green light to flout trade laws. The mere threat of a legal fight over a DOJ enforcement action can be, and often is, detrimental.

In this regard, the DOJ has already used the FCA for tariff enforcement, which prohibits materially false statements to the government for the purposes of receiving a benefit or paying less money owed. Federal courts of appeal have already held that the FCA may be used to sanction tariff evasion. When a violation is established, the violator can be on the hook for three times whatever benefit they derived from their false claims, in addition to civil penalties for each false claim. The DOJ can also use criminal statutes to prosecute tariff evasion related schemes, such as the broad wire fraud statue or false statements statute, which carry penalties of up to 20 years and five years in federal prison, respectively.

Moreover, federal law enforcement authorities have a panoply of criminal statutes at their disposal which address trade related crimes specifically. For example, Title 19, section 1586 of the US Code prohibits “unlawful transshipment” and threatens penalties of double the value of unlawfully transshipped merchandise, but not less than $10,000. Plus, violators can also face up to 15 years in prison.

In sum, while it is unclear how the legal bases for certain tariffs will play out, what is abundantly clear is that US federal law enforcement authorities are keenly focused on investigating and prosecuting trade-related crimes.

 

Kan Nawaday and Samidh Guha are partners and Jared Boone is an associate at Venable LLP. Mr Nawaday can be contacted on +1 (212) 370 6240 or by email: kmnawaday@venable.com. Mr Guha can be contacted on +1 (212) 503 9846 or by email: sguha@venable.com. Mr Boone can be contacted on +1 (312) 820 3445 or by email: jaboone@venable.com.

© Financier Worldwide

BY

Kan Nawaday, Samidh Guha and Jared Boone

Venable LLP

©2001-2026 Financier Worldwide Ltd. All rights reserved. Any statements expressed on this website are understood to be general opinions and should not be relied upon as legal, financial or any other form of professional advice. Opinions expressed do not necessarily represent the views of the authors’ current or previous employers, or clients. The publisher, authors and authors' firms are not responsible for any loss third parties may suffer in connection with information or materials presented on this website, or use of any such information or materials by any third parties.