United States Establishes New Department to Combat Tax Avoidance: Transshipment, Low Value, and False Reporting Face Criminal Charges

Starting from next week (August 1), Trump plans to impose a new round of tariffs on countries worldwide. To support the implementation of these tariffs, the U.S. Department of Justice has established a special unit and is actively preparing to bring criminal charges against companies and individuals evading tariffs. This marks a shift in tariff enforcement strategy from traditional fines and civil settlements to criminal accountability.

Some U.S. customers have reported that they have recently received highly targeted trade information disclosure requests from U.S. Customs and Border Protection, requiring companies to provide information regarding product classification and the relationship between buyers and sellers.

The U.S. Customs has long sought to prevent activities that evade tariffs through relatively common methods, including transshipment of goods (concealing the true country of origin), false declaration of tariff classification, and systematic underreporting of transaction values.

The U.S. Department of Justice has established a special unit and deployed "key personnel" to focus on investigating corporate trade crimes such as trade fraud. This includes a financial fraud unit specifically targeting companies that evade tariffs.

Meanwhile, prosecutors from the U.S. Attorney's Office have requested trade transaction records from the Biden administration period and since Trump's inauguration, as well as information on shipments and communications between companies and other enterprises in their supply chains, with the aim of identifying potential violations and tax evasion by businesses.

Previously, tax evasion was usually dealt with through fines or civil settlements, and criminal prosecution was rare. However, it has now been elevated to criminal charges.

The head of the criminal department of the division, Matthew Galeotti, stated: "Serious trade fraud activities (such as systematically undervaluing goods and forging the country of origin) will trigger criminal proceedings, as they deliberately evade import costs."

Galeotti stated that prosecutors are investigating tax evasion in industries such as steel, aluminum, textiles, and consumer goods.

The Department of Justice's actions align with Trump's April pledge, in which he promised that those evading tariffs imposed globally would face "very serious" consequences. It is currently unclear how much progress has been made in investigating possible tariff evasion by the government. Such investigations may take several months, while some new tariffs have only been in effect for a few weeks, and more tariffs are expected to come into force on August 1.

U.S. officials say that tax evasion may cost the government billions of dollars in lost revenue each year.

The Department of Justice traditionally relies on agencies such as Homeland Security Investigations (HSI) and Customs and Border Protection (CBP) to provide cases of egregious tariff evasion that may lead to civil or criminal charges.

According to informed sources, CBP also seems to have increased scrutiny on companies affected by the tariff increases.