Say I’m a US automaker importing engine blocks from China. Before tariffs they cost me $500, now I pay $125 in tariff. If both parties changed the price to $100 per block, accompanied by a $400 “licensing fee”, how would that be caught or stopped?
Say I’m a US automaker importing engine blocks from China. Before tariffs they cost me $500, now I pay $125 in tariff. If both parties changed the price to $100 per block, accompanied by a $400 “licensing fee”, how would that be caught or stopped?
Comments
You’re a US automaker importing engine blocks from China.
By finding out that you’re adding a $400 charge on after the fact, as nice people in suits and badged knock on your door and ask about it.
That’s customs fraud, as they are misclassifying/undervaluing the imports. As for how they would get caught, I’d say that a company that imports hundreds of thousands or millions of engine blocks would probably get noticed if their customs payments actually went down after the increase in rates.
Usually this is address through a civil action, where they can be made to pay hefty penalties. It could even include criminal penalties, with a potential of prison time for each offense.
Licensing intellectual property is also tariffed.
It’s called fraud and we have people to investigate that
They have entire departments just to find and punish it, and the court cases can be ‘make up a number and times it by x’
Theyre allowed to assume if they caught you once, you did it many more
Make your engine blocks in America. That’s the whole point of tariffs.
Importer here. Customs has an “expected price range” for things. If 90% of US importers is bringing in engines at $500, the $100 price showing on your docs will flag things.
CBP knows what you’ve been importing and how much you’ve been paying for it.
If you keep importing the same thing and it costs 1/5 as much you will get to go to jail.
Doesn’t matter what you change the commercial value to. 19 CFR outlines valuation rules, and “price paid, or payable” is a hard rule. You have to declare the price you paid for it, or the price you would have paid for it on the open market…which ever is higher. If you reduce the commercial invoice to avoid duties, the ABI system will flag it for being outside of the customs range for that tariff number. At that point you will wish you’d just paid the duty. You’ll get fined for fraudulently declaring commercial value, then every shipment you import after that will be flagged for doc revue, customs inspection…they’ll make your life a living hell.
In so many words, they see you when you’re sleeping and know when you’re awake.
Tariffs are a type of tax. Violations carry the weight of criminal law.
Improperly representing or reporting your import duties is like misrepresenting your income.
Straight to jail…..unless you be rich.