Question of the Week -- Will New Tariffs Result in More Fraudulent Tariff Dodging?
On May 31, the White House announced new tariffs on steel and aluminum entering the United States from Canada, Mexico, and the European Union. Steel from those countries and the European Union will be subject to a 25% tariff, and aluminum will be subject to a 10% tariff.
While the steel and aluminum tariffs were originally proposed to apply to imports from a larger number of countries, the White House announcement states that agreements were reached regarding steel imports with Australia, Argentina, Brazil, and South Korea, and regarding aluminum with Australia and Argentina. Imports from those nations will not be subject to the new tariffs.
As we have previously written, when importers are faced with higher tariffs, some may try to cheat to avoid those costs. If tariffs are imposed on goods that are imported from one country, but not on those same goods imported from a different country, parties may engage in “transshipment” or other fraudulent schemes to misstate or conceal the country of origin and therefore avoid the tariff. Such fraud can be difficult to detect and, for some, the small risk of getting caught is worth it to avoid paying a 25% tariff. Insiders with knowledge of such schemes, however, can play a critical role, and whistleblowers who report unlawful tariff evasion by bringing a claim under the False Claims Act may be entitled to a financial reward if the government recovers money.
What do you think? Will the new tariffs result in more fraudulent tariff dodging?
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