Sweep duties on Canadian, Mexican and Chinese products that President Trump imposed on Tuesday could burden systems that collect import obligations and government agencies that enforce those fees, trade and legal experts said.
While collecting import duties is usually a routine task, new duties are imposed on Mexican and Canadian goods, many of which have not been tax-exempt for many years. In addition to the challenges, there is a huge amount of products that are subject to new tariffs. The US has more than $1.3 trillion imports from China, Mexico and Canada last year, or about two-fifths of all imports.
The tariffs apply a 25% obligation to goods from Mexico and Canada, and an additional 10% to imports from China.
Importers usually employ customs brokers to calculate and pay customs duties to the US Customs and Border Patrol, the government agencies that collect them.
Adam Lewis, co-founder and president of customs broker Clearit, said that while it is not difficult to adjust the software to collect new tariffs, a critical part of the tariff payment system may require considerable adjustments. Importers must purchase “customs liabilities,” a type of insurance that guarantees their duties will be paid. Lewis said some customers may have to increase the size of their bonds to cover their surcharge payments.
“Many of their products are tax-free and suddenly it's going to increase by 25%,” he said. “It's pretty big.”
Furthermore, importer police for tariff avoidance is a much bigger challenge for customs, border security and the Department of Justice. Some importers may try to avoid customs duties by modestly underestimating the costs of goods in the Customs Declaration or by mistakenly claiming that they were imported from a country that is not subject to customs duties.
“The greater the breadth and severity of these new tariffs, the more likely it is that at least some potential importers want to misrepresent the value or origin of the goods,” said Kirti Vaidya Reddy, a former federal prosecutor who is currently a partner at the law firm Quarles.
If the government determines that the importer is not paying the duties, customs officials may require the importer to pay the amount.
In a statement, a customs spokesperson said: “The dynamic nature of our mission, along with evolving threats and challenges, requires CBP to adapt quickly while maintaining flexibility, seamless operation and mission resilience. These tariffs help us maintain America's global competitiveness and protect the American industry from unfair trade practices.”
Several evasion cases have been subject to criminal prosecution. Last year, a Miami importer pleaded guilty to participating in an import scheme involving China's truck tires, which the Justice Department said had spent more than $1.9 million in solid tariff revenue on the United States.
However, strengthening enforcement efforts is likely to require the Justice Department to devote significantly more staff to pursue tariff avoidance cases, lawyers said it could take time to build.
“The Department of Justice has the personnel and infrastructure to do that, but these cases are complex, cross-border and document-rich,” said Artie McConnell, a former federal prosecutor who is a partner at the law firm Bakerhostetler. “You can't hurry up with it, and the prosecution probably won't come anytime soon.”
