With higher tariffs, expect more tariff evasion
You might get around tariffs by lying about what goods you’re importing, their value or where they’re from. But the penalties are severe.

You know when you return from traveling abroad and just want to get back to your bed, but you still have to wait in that annoying line for that customs officer to ask you those annoying questions?
Well, if you’re a bicycle from China or a T-shirt from India, you probably wouldn’t have to wait to interact with anyone from customs.
“So the average inspection rate, and year over year it kind of changes, has been averaging like, 3% to 5%” of foreign goods coming into the United States, said Angela Lewis, a licensed customs broker for the logistics company Flexport.
It’s her job to file the paperwork U.S. Customs and Border Protection requires for stuff to enter the country. She said Flexport’s inspection rate is lower than the national average.
More than $3.3 trillion worth of goods entered the U.S. last year. It’s simply impossible for customs to inspect all of that.
Which means that when Lewis fills out the electronic paperwork for, say, a shipping container of 100 bicycles from China to get through the Port of Long Beach in California, the federal government is mostly trusting that what’s in that shipping container is actually 100 bicycles, and not 500 bicycles — which would require five times more in tariff payments.
Lewis said it’s hard to know how much tariff evasion is actually happening, and the risk of auditing or investigation by the federal government is pretty strong deterrent. But the pace of changes to U.S. trade policy in recent months may be putting U.S. customs in a tough spot.
“I do think that the way the tariffs are being implemented, and the speed at which they are, is making it easier right now for some fraud and evasion, just because of how hectic it is,” said Lewis.
Goldman Sachs estimated that in 2023, tariff evasion in the U.S. totaled $110 billion to $130 billion. And that was before the Trump administration’s tariff hikes.
Economist Derek Kellenberg at the University of Montana said the incentive to cheat is higher now.
“We find that for every 1% increase in tariffs, there’s a 3% increase in misreporting of trade values in industrialized high-income countries,” Kellenberg said.
There are three common ways to evade tariffs: lie to the government about the value of the goods you’re bringing in; lie about what goods you’re bringing in; or lie about what country you’re bringing the goods from.
But there’s also just good old-fashioned smuggling — like if you were trying to bring in drugs or guns or other illegal contraband into the country outside an official port of entry.
“Rather than drugs or guns, it may become more profitable to be smuggling avocados, eggs and iPhones at the current tariff rates,” said Kellenberg.
Customs and Border Protection may not want to publicize its most effective enforcement tactics, as doing so might give an advantage to bad actors. The agency declined an interview request, but acknowledged that new tariffs do give rise to new evasion tactics, which can make enforcement even more of a challenge.
But the penalties for tariff evasion can be severe.
Attorney Vivek Kothari at Whistleblower Law Partners said beyond a tripling of the missed tariff payment, there’s also a per-violation penalty.
“And so if you are falsely claiming, you know, hundreds of thousands of goods entering the company at a lower price, you can see how that would add up,” said Kothari.
Kothari said Customs and Border Protection and the Department of Justice often rely on external tips to start an investigation.
And those often come from other companies that suspect their competitor isn’t playing by the rules, or from good Samaritan employees.
”Whistleblowers are probably the best and one of the only ways for reporting when a company evades tariffs,” said Kothari.
Whistleblowers directly collect a portion of the lost revenue they report, and payouts can be in the millions. The Trump administration may want to advertise that whistleblower reward a little bit more.