In the roughly four weeks since his inauguration, President Trump has announced then paused tariffs on Canada and Mexico, expanded tariffs on steel and aluminum, and suggested introducing reciprocal tariffs on the rest of the world.

This article is an effort to take stock of what has happened to date, what may be next, and how companies can try to manage the uncertain landscape, particularly given the possibility of enhanced enforcement.

President Lays Out Aggressive Approach to Trade Policy

On day one of his administration, the president issued a presidential memorandum outlining his vision on trade. The wide-ranging document, entitled “America First Trade Policy,” directs government agencies to, among other things:

• Investigate causes, risks, and solutions to trade deficits.
• Investigate the feasibility of establishing an “External Revenue Service.”
• Begin public consultation for review of the United States-Mexico-Canada Agreement (USMCA).
• Review currency manipulation by trade partners.
• Review existing trade agreements.
• Investigate discriminatory or extraterritorial taxes by foreign countries.

Tariffs on Canada, China, and Mexico

On February 1, President Trump announced a 25% tariff “on articles the product of” Canada and Mexico (with a reduced tariff on imports of Canadian energy products) and a 10% tariff on Chinese products. Trump also announced the elimination of “duty-free de minimis treatment” for articles coming from these countries.

In addition, the order ended the use of duty drawback and inversion benefits for products passing through a foreign trade zone (FTZ). Nor is there an established process for exclusions or exemptions. The 25% tariff would be on top of all other tariffs that already apply to the goods.

The new duties were scheduled to go into effect on February 4, 2025. But following discussions with the Mexican President and Canadian Prime Minister, President Trump announced that the Canada and Mexico tariffs would be delayed until March 4, 2025.

There was no similar pause for the 10% tariff on Chinese products.

Then the president paused tariffs on small-value packages – in something of a fillip to China – to give federal agencies time to determine how best to deal with the millions of such shipments that enter the United States each day.

Steel and Aluminum Tariffs Imposed Under Section 232

The following week, on February 11, President Trump announced that the United States would hike tariffs on: (1) steel imported from countries that previously had alternative arrangements, and (2) all aluminum imports.

Acting under Section 232 of the Trade Expansion Act of 1962, the president issued an Executive Order, entitled Adjusting Imports of Steel Into the United States, that imposes a 25% tariff on all covered imports of steel and derivatives from previously exempt countries (Argentina, Australia, Brazil, Canada, EU countries, Japan, Mexico, South Korea, Ukraine, and the United Kingdom). A separate Executive Order on aluminum increases the duty rate to 25% (from 10%) on all covered imports of aluminum and derivatives and terminates previously existing alternative arrangements with Argentina, Australia, Canada, the EU, Mexico, and the United Kingdom.

The president also directed the Department of Commerce to “establish a process” for including additional derivative steel and aluminum articles under the tariffs and instructed Customs and Border Patrol (CBP) to “prioritize reviews of the classification of imported” aluminum and steel articles and, as needed assess “monetary penalties in the maximum amount permitted by law.” Additionally – as with Canada, China, and Mexico – covered steel, aluminum and their derivative articles that enter an FTZ must be admitted under “privileged foreign status” and are disqualified from enjoying duty drawback credit.

President Considers Imposing Across-the-Board Reciprocal Tariffs

Most recently, on February 13, President Trump signed a memo on reciprocal trade and instructed certain federal agencies to study ways to tailor U.S. tariff rates to individual countries based on their rates. The Secretary of Commerce said the studies will be completed by April 1.

If implemented, the “reciprocal” actions would contravene a key tenet of the international trading system—Most Favored Nation (MFN) status. This would be a significant rebuke to the World Trade Organization (WTO) and its principles. While the president has hinted at targeting those countries with the largest trade deficits, it remains unclear which nations the Trump administration will prioritize. Moreover, implementing a reciprocal tariff in the proposed manner would be a massive administrative challenge. For example, one former government official estimated the number of product lines in the U.S. tariff code – which is used to identify specific imported products and their corresponding duty rate – would have to increase from roughly 11,000 to about 2 million.  

Enforcement Likely to Increase, Including Through False Claims Act

As the challenge of complying with tariffs and overall trade policy increases, it is likely that the U.S. government’s enforcement efforts will also expand. We expect the administration to employ several statutory authorities to bring civil – and potentially criminal – action against tariff evaders.

First, is the False Claims Act (FCA), which imposes liability on any individual who “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval [or] knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim.” In the customs context, this could take the form of under-representing an obligation that must be paid to the government.

In fact, Deputy U.S. Assistant Attorney General Michael Granston recently commented that the FCA could be used to combat tariff evasion. Notably, the FCA allows for treble damages and includes a whistleblower mechanism whereby individuals can disclose potential violations to the government and enjoy up to 30% of any proceeds their “tip” may generate – even if the government itself decides not to pursue enforcement action itself.

Second, the U.S. government may try to rely on the International Emergency Economic Powers Act (IEEPA) to charge against tariff evaders. (While IEEPA has frequently been the authority to establish economic sanctions regimes and freeze assets, President Trump’s use of the law to authorize tariffs is novel and may not withstand judicial scrutiny. That issue is beyond the scope of this article but very much bears watching.).

Assuming tariffs imposed under IEEPA are allowed to stand, the U.S. government could leverage the substantial potential criminal penalties authorized by IEEPA to take action against tariff evasion or fraud. Among other things, individuals who violate IEEPA can be subject to prison sentences of up to 20 years. Civil fines in the amount of $377,700 per violation, or an amount that is twice the amount of the underlying transaction, whichever is greater, may also be imposed.

Third, the government could pursue criminal charges under a conspiracy theory. Pursuant to 18 U.S.C. 371, conspiracy can be charged “[i]f two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner …” The government need not even prove the defendant committed an offense, but simply that the defendant engaged in a conspiracy to “impair or impede” a lawful function of government, e.g., collecting tariff revenue.

These causes of action are in addition to the administrative enforcement actions that CBP often brings for duty underpayment. Moreover, there are plenty of other criminal laws – including those covering wire fraud, smuggling, and false statements – that an aggressive prosecutor could seek to use as the basis to punish violations. Any party involved in exporting goods to the United States or importing goods into the United States needs to closely monitor the evolving tariff landscape.

If you have any questions about this article, please contact the authors or any other point of contact you have at Bass Berry.