Trump Can Use Private Whistleblower Lawsuits for Tariff Evasion

The Trump administration may use a variety of enforcement tools to ensure compliance with tariffs, including the False Claims Act. Companies should ensure all their customs declarations are accurate, they aren’t participating in any unlawful attempts to evade duties, and their compliance regimes ensure employees or agents take steps to avoid making knowingly false statements about imports.

Under the FCA, private whistleblowers, not just government attorneys or law enforcement agents, can bring civil lawsuits to report fraudulent customs claims. If the government intervenes and recovers money, a whistleblower is entitled to 15% to 25% of the proceeds of the case.

Just as a passenger on an airplane self-reports goods on a customs form when entering the US, importers are responsible for self-reporting goods entering the country in accordance with US trade laws. That means anyone importing a good into the US must accurately report key information that determines what tariff rate applies and how much they owe the government.

The importer must declare the good’s country of origin, its proper classification under the Harmonized Tariff Schedule, and the total volume being imported, even through multiple shipments. If an importer knowingly reports one of those categories of information and that results in underpaying the amount of tariffs owed to the US, a whistleblower could bring a private, civil lawsuit that draws in the Department of Justice and recover a share of the final damages or settlement as a reward.

Customs-related lawsuits under the FCA have totaled millions of dollars through settlements or judgments secured by Democratic and Republican administrations. These actions only stand to grow with President Donald Trump weighing new duties on cars, steel, and imports from major trading partners such as Canada, Mexico, China, and the European Union.

That gives whistleblowers an even greater incentive to bring private claims—and poses serious risks for importers developing strategies to mitigate the effects of trade shocks. Even the most well-intentioned companies with strong import operations could face these risks if just one representative acts with deliberate indifference or reckless disregard as to the accuracy of the information being used to determine the customs duties due to the government..

High-level officials in the Trump administration have already acknowledged the law’s value. At her confirmation hearing, Attorney General Pam Bondi said that the FCA is “so important” because of the “money it brings back to our country.” Indeed, in 2024, settlements and judgments under the FCA altogether exceeded $2.9 billion, bringing monies back to the government from those who allegedly sought to defraud the government.

Regardless of size, companies with import operations in the US should expect the administration to use the FCA as a main tool for enforcement. Even if a company isn’t found liable, the costs of a whistleblower claim can be steep and can take years to litigate, even in the fastest-moving federal courts, because of the protracted nature of discovery and motion practice in federal court.

Given the complexities of reporting obligations, and the constantly shifting legal landscape, importers can limit their liability by contacting their legal counsel regarding questions about specific imports. False claims typically fall into three categories.

Misclassification. Importers should ensure they are correctly reporting the types of goods they are importing and that they aren’t misstating the type of good being imported. For example, the Biden administration sued a former executive of a solar company in October 2024, alleging he misclassified solar panels as LED lights. In January 2023, the Biden administration reached a $22.8 million settlement regarding the classification of vitamins and nutritional settlements.

Transshipment. Importers should pay attention to the country of origin and avoid false statements regarding a good’s true origin. In many cases, goods originating from a high-tariff country such as China might ship a good through a third country with a lower tariff rate, such as Malaysia, to avoid paying the higher duty.

Underreporting. The government wants the full value of the tariff for the goods being imported. If an importer misstates the weight or value of the goods being imported, they could face penalties. Importers should make sure they don’t misrepresent a good’s value and ensure that it isn’t subject to special tariffs, such as anti-dumping or countervailing duties. Those duties may apply if the government finds that tariffs are necessary to protect US industry from trade practices such as foreign government subsidies, or other policies that make foreign goods unfairly cheap in the US market.

For example, the first Trump administration reached a $22.2 million settlement with a German company and its US subsidiaries that the government alleged imported materials into the US for use in the construction of natural gas and chemical manufacturing plants and misrepresented the nature, classification, and valuation of imported merchandise.

As the government continues to tighten its focus on tariff and trade policy, companies should expect higher trade-related liability risks under the FCA. Compliance is always essential, and importers should not overlook FCA risks when importing goods or supervising employees who report duties to the government.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Kirti Reddy is co-chair of the government enforcement defense and investigations team at Quarles & Brady.

Ryan Rainey is an associate at Quarles & Brady.

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