President Trump’s “America First” Trade Policy has created significant uncertainty for parcel shippers. US trade policy is changing. Some details still need to be filled in, but the first chapter of the America First Trade Policy – setting the new base duty rates – is arguably over for all but a few countries. In addition, while in the recently enacted One Big Beautiful Bill Act (“OBBBA”) Congress set a July 1, 2027 sunset for the commercial Section 321 de minimis duty exemption for shipments valued at or below $800 dollars, President Trump has announced an effective suspension of the program as of August 29, 2025. Unless either Congress or the courts put a stop to them, the new Trump tariffs and the suspension of the de minimis exemption are here.
The second chapter of the America First Trade Policy will focus on compliance. Parcel shippers should expect a heightened legal enforcement environment with a risk of stricter fines, penalties, and even criminal charges for imports that violate the customs laws. Efforts to avoid new country of origin tariff rates by transshipping goods to the United States through a second country are likely to be a significant target of federal enforcement.
In a July 31, 2025 Executive Order entitled Further Modifying the Reciprocal Tariff Rates (“Executive Order”), President Trump directed that when US Customs and Border Protection (CBP) has determined that an article has been transshipped to evade the new Executive Order’s applicable duties of a country of origin CBP shall subject the article to (i) an additional ad valorem rate of duty of 40%, in lieu of the additional ad valorem rate of duty that would apply to the goods of the country of origin; (ii) any other applicable or appropriate fine or penalty, including those assessed under 19 U.S.C. §1592, and (iii) any other US duties, fees, taxes, exactions, or charges applicable to goods of the country of origin. The Executive Order also states that “CBP shall not allow, consistent with applicable law, for mitigation or remission of the penalties assessed on imports found to be transshipped to evade applicable duties.”
Importers must use reasonable care when complying with the US Customs laws. This includes being informed about the applicable rules and providing accurate information and documentation to Customs about their imports. Three possible violation levels – fraud, gross negligence, or negligence – are set forth for violations of 19 USC §1592 when a person enters, introduces, or attempts to enter or introduce goods into the United States by using a document, data, or information which is material and false; or if the information has any omission that is material. The prohibition also applies to any person who aids or abets any other person who violates the law.
Existing law already prohibits falsifying documents or engaging in the transshipment of goods to hide the country of origin of an import to avoid applicable duty rates. What is new in the America First Trade Policy is the 40% ad valorem tariff rate for transshipments and what is now a strict liability enforcement of the existing law.
Customs has extensive discretion to mitigate statutory penalties depending on the circumstances of a customs law violation. These statutory penalties range from the lesser of two times the loss of lawful duties, taxes, and fees or the domestic value of the merchandise for negligent violations of the customs laws that affect the assessment of duties up to the full domestic value of the merchandise for fraud. Under the new Executive Order, a consideration of the CBP mitigation factors that might reduce these penalties will no longer be possible for transshipment violations. Even merely negligent or unintentional customs violations involving transshipments may be subject to strict statutory penalties, without regard to the total circumstances that led to the violation.
Determining the proper country of origin; classification; and valuation of a product can be difficult, especially if components are sourced from one or more countries but are assembled into a final product in a different country before shipment to the United States. In such circumstances the country of origin often depends on the origin of the components and whether a substantial transformation of those components occurred so as to create a new product.
During the first Trump Administration, some companies allegedly sought to avoid the Trump China tariffs by shipping goods through third countries. Some Chinese companies also established new companies and facilities and factories in other countries while allegedly continuing to source most components from China. The Trump Administration’s new 40% transshipment tariff anticipates that importers will engage in such circumvention schemes to avoid its new tariffs. The Executive Order thus requires the Departments of Commerce and Homeland Security, acting through CBP, to publish a list of countries and specific facilities used in circumvention schemes, to be updated every six months The Executive Order says that this list will inform public procurement, national security reviews, and commercial due diligence.
Several other Trump Administration actions signal the heightened risk importers may face for tariff evasions, including potential criminal law violations. Under US law, a person who knowingly effects an import upon a false classification, false statement, or by payment of less than the amount of duty legally owed can be fined; imprisoned for not more than two years; or both. On May 12, 2025, the Department of Justice Criminal Division issued an internal enforcement memo that included “trade and customs fraud, including tariff evasion”, as a “high-impact” priority area for investigation and prosecution. The Department also added to the DOJ Criminal Division’s Corporate Whistleblowers Awards Pilot Program “trade, tariff, and customs fraud by corporations” as a priority area of focus.
DOJ is also using statutes beyond the customs laws, including the False Claims Act (FCA), to prosecute illegal foreign trade practices that may involve tariff violations. In this context, Parcel shippers should be aware that companies can bring lawsuits against competitors under the FCA for alleged violations of the customs laws, including actions involving tariff evasion.
The uncertainty of the first chapter of the America First Trade Policy is now mostly over. The second chapter – compliance and enforcement – is just beginning. Parcel shippers analyzing the new environment cannot just focus on the new tariff rates. They also need to consider the rules governing country of origin; valuation; product classification; substantial transformation of goods; and other customs compliance issues. More guidance on these issues from the Trump Administration may be forthcoming. If not, parcel shippers need to rely on existing court and Customs rulings in their customs compliance activities.
Parcel shippers navigating the new America First Trade Policy especially need a heightened awareness of the relationship between rules of origin and transshipments. Verifying and documenting the compliance with US law of both the importer and all other parties to the import transaction is crucial. Even if the rates and focus areas have changed under the new Trump tariffs, the reasonable care obligations of parcel shippers in complying with the customs laws have not. To prepare for the heightened scrutiny of imports that will occur in Chapter Two of the America First Trade Policy, parcel shippers should be taking steps now to audit and document their supply chains so as to comply with the new rules.
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Andrew M. Danas is a partner with the Washington, D.C., law firm of Grove, Jaskiewicz and Cobert, LLP, Washington, D.C. 20036. www.gjcobert.com; adanas@danaslaw.com. The information contained in this article is intended to be general background information. It does not constitute and should not be relied upon as legal advice. Readers should contact a qualified attorney should they have a specific legal question.
This article originally appeared in the September/October, 2025 issue.
