CBP Cracks Down on $400M Tariff Evasion Scheme by Chinese Shell Companies

The U.S. Customs and Border Protection (CBP) has uncovered a significant tariff evasion network, identifying over $400 million in unpaid duties. This operation underscores the persistent challenges in global trade compliance and highlights the sophisticated methods employed to circumvent U.S. tariffs, reinforcing the agency’s enhanced enforcement capabilities aimed at safeguarding domestic industries.

• CBP has identified more than $400 million in unpaid duties from a single tariff evasion network.
• The investigation was conducted under the Enforce and Protect Act (EAPA).
• Over $250 million of the evasion originated from 23 Chinese shell companies.
• Goods were falsely represented as originating from other Asian nations to avoid U.S. tariffs.
• CBP characterizes this as an unprecedented, consolidated Antidumping and Countervailing Duties (AD/CVD) evasion investigation.

Investigations Under the Enforce and Protect Act (EAPA)

These findings stem from investigations conducted under the Enforce and Protect Act (EAPA), a critical legislative tool against illegal transshipments and schemes to defraud the U.S. government. The initial $400 million figure is projected to rise as further inquiries unfold. Rodney Scott, CBP Commissioner, affirmed that EAPA is “a critical component of our trade enforcement efforts” to prevent evasion and ensure a level playing field for U.S. companies, consistent with President Trump’s priority of economic fairness.

Sophisticated Evasion Tactics Uncovered

A substantial portion, exceeding $250 million, of the evasion originated from 23 Chinese shell companies. These entities funneled goods falsely represented as products from other Asian nations (e.g., South Korea, Indonesia, Vietnam) to avoid tariffs. On-site checks, including at mattress factories in Taiwan and Indonesia, revealed no actual production, confirming transshipment as a key evasion tactic.

Unprecedented Scope and Ongoing Enforcement

Susan S. Thomas, acting Executive Assistant Commissioner for CBP’s Office of Trade, highlighted the operation’s unprecedented scope: “Never before has CBP identified this many importers evading AD/CVD [Antidumping and Countervailing Duties] in a single consolidated EAPA investigation.” An additional 89 cases are currently flagged for suspected duty evasion. Ongoing investigations are expected to increase monetary recovery beyond the initial $400 million, reinforcing CBP’s vigilance in trade enforcement.