A New Enforcement Landscape
The Trump Administration's expanding tariff policy has elevated customs compliance as a key enforcement priority. The Department of Justice (DOJ) is increasingly using the False Claims Act (FCA) to target misstatements in import documentation—such as undervaluation, misclassification, and false country-of-origin declarations.1 For startups and scaling companies involved in international trade, for example, by having an overseas supply chain, this creates significant exposure. For investors, it introduces a material diligence and portfolio risk.
FCA Liability in the Customs Context
The FCA allows the government—and whistleblowers—to pursue civil claims for knowingly avoiding obligations to the federal government. In customs cases, this often involves underpayment of duties. Recent enforcement actions include an $8.1 million settlement with Evolutions Flooring Inc. for evading customs duties and other multi-million dollar cases involving false invoices and valuation errors. Many of these cases originate from whistleblowers, who may receive up to 30% of any government recovery.
What Companies and Investors Should Do Now
For early- and growth-stage companies, the implication is clear: customs compliance is now a business-critical risk area. Companies should ensure that classifications, valuation methods, and origin determinations are accurate and well-documented. Internal policies governing customs compliance should be formalized and routinely reviewed. Management should encourage internal reporting and act promptly when employees raise concerns. Supply chain partners—including overseas vendors and brokers—must also be vetted, as inaccuracies in their data may become a liability for the importer. Engaging experienced legal counsel to audit customs practices or advise on internal controls is no longer reserved for large multinationals—it is increasingly prudent for companies scaling internationally. This is additional bureaucracy, but is key given the heightened enforcement risk.
Conclusion
In today's enforcement environment, trade compliance is no longer a procedural formality—it has become a potential source of legal liability, reputational risk, and significant litigation cost. For investors, customs risk should now be a factor in due diligence assessments. For founders and executives, customs exposure belongs alongside tax, IP, and regulatory matters in evaluating a company's legal and operational posture. The combination of heightened tariffs, strong whistleblower incentives, and increased DOJ scrutiny has made the FCA a powerful mechanism for regulating global commerce.
Footnote
1. U.S. Department of Justice. (2025, March 25). Evolutions Flooring Inc. and Its Owners to Pay $8.1 Million to Settle False Claims Act Allegations Relating to Evaded Customs Duties. https://www.justice.gov/opa/pr/evolutions-flooring-inc-and-its-owners-pay-81-million-settle-false-claims-act-allegations
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