Trade Crime & Enforcement 101
Understanding how trade crime works, why it matters, and what tools exist to fight it.
What is Trade Crime?
Trade crime is the deliberate, systematic violation of U.S. trade laws to gain unlawful competitive advantage in cross-border trade—undermining fair competition, American workers, and national security.
This is economic warfare
Three Primary Categories of Trade Crime
Trade crime takes many forms, each threatening American workers, businesses, and national security. Understanding these categories is essential to combating this economic warfare.
Customs Fraud
The systematic evasion of U.S. customs duties through deliberate misrepresentation of goods. Trade criminals use these methods—often in combination—to minimize their tariff bills and gain illegal competitive advantages.
Transshipment
How it works: Goods are routed through third countries—especially Southeast Asian nations like Vietnam, Thailand, and Cambodia—to disguise their Chinese origin and avoid tariffs. Products are briefly processed or repackaged to create the appearance of local manufacturing, then exported to the U.S. with fraudulent country-of-origin labels.
Estimated fraudulent trade via transshipment in 2023
Source: Goldman Sachs, 2025 research note.
Undervaluation
How it works: Importers declare goods at a fraction of their real value to reduce duty payments. This is accomplished through falsified invoices, collusion between foreign exporters and U.S. importers, or sophisticated shell-company schemes that obscure true transaction prices. The lower the declared value, the lower the tariff owed.
Gap between declared value of China exports to US vs. declared value of US imports from China in 2025
Approximately 2/3 likely fraud-driven.
Source: Bloomberg analysis of trade mirror statisticsMisclassification
How it works: Importers deliberately use incorrect Harmonized Tariff Schedule (HTS) codes to qualify for lower tariff rates. By misrepresenting what a product is—for example, classifying finished goods as raw materials or industrial equipment as consumer items—cheaters exploit the complexity of the tariff code system to pay less duty than legally owed.
Estimated fraudulent trade in 2023
Source: Goldman Sachs, 2025 research note
The Scope of Customs Fraud
In Chinese imports that fraudulently evaded Section 301 tariffs
2018–2025
In Section 301 tariffs evaded
2018–2025
Estimates based on EnforcementNOW analysis. Explore the data with our Tariff Fraud Calculator.
Go deeperIP Theft
The state-directed or state-tolerated acquisition of proprietary technology and trade secrets through cyber-intrusions, industrial espionage, and coercive technology transfer.
Systematic theft of U.S. innovation through cyber-intrusions, espionage, and forced technology transfer to gain unfair competitive advantage.
Annual losses to U.S. companies
Forced Labor
Work exacted under coercion through threat, debt, restriction of movement, or other penalties—prohibited in U.S. supply chains.
Any good made wholly or in part with forced labor is barred from U.S. entry. The UFLPA adds China-specific enforcement.
Human Rights Violations
Five Primary Enforcement Tools
eAllegation
CBP
Filings (2022-July 2025)
❌ Poor Response Rate
No feedback or outcome
False Claims Act
DOJ Civil
Case duration
⚠️ Limited Effect
15 cases, $3M median
Criminal Whistleblower
DOJ Criminal
Launched May 2025
✅ High Potential
70+ cases in pipeline
EAPA
CBP, ITC, DOC
Open Cases (2025)
❌ Ineffective
Shell companies evade
UFLPA
CBP, FLETF (DHS)
Xinjiang Focus
⚠️ Mixed Results
Proxy routing continues
"The PRC's systematic abuse of U.S. trade laws and protective mechanisms through transshipment, forced labor, and other illicit trade practices represents a clear and urgent threat to American industry and workers… we urge your agencies to strengthen enforcement against the PRC's unlawful trade practices, including by criminally prosecuting trade criminals…"