Reporting Evasion of Section 301 Steel and Aluminum Tariffs: The Paper Trail

Section 301 tariffs on steel and aluminum from China have been in place since 2018 — and since they rose to 25% in May 2019, some U.S. companies have been quietly trying to avoid them. Through our work on the Precision Cable Assemblies case and others, we have seen firsthand how those evasion schemes work. The evidence to expose them is often sitting right inside a company’s own financial records.

In March 2018, the United States imposed Section 232 tariffs on steel (25%) and aluminum (10%) from China, and the impact on some U.S. businesses was immediate and significant. Those tariffs yielded to Section 301 tariffs in 2018 and 2019 that remain in place to this day. For companies that depended on Chinese-origin steel wire, aluminum extrusions, or fabricated metal components, tariff rates of 25 percent transformed narrow margins into outright losses. The pressure to find relief — legal or otherwise — was intense from the start.

That pressure did not ease. In 2025, additional tariff actions layered further duties on top of existing Section 301 rates, raising effective tariff burdens to levels that may have seemed impossible to absorb through ordinary cost management. For companies already operating at the edge of compliance, the calculus shifted again: the financial reward for evasion grew larger, and so did the risk that someone inside the company would notice and act.

That is where qui tam whistleblowers enter the picture.

What We Learned from Precision Cable Assemblies and Other Section 301 Investigations

The Precision Cable Assemblies matter resulted in a $10.4 million False Claims Act recovery — one of the largest customs fraud recoveries in a qui tam case. While the specifics of that litigation are not something we can detail publicly, the case gave our firm an unusually deep look at the mechanics of steel and aluminum tariff evasion and what it looks like when a U.S. company systematically underpays duties over an extended period.

Through that case, subsequent consultations, and work on other sealed matters, we have become familiar with the range of methods that some importers have used to reduce or eliminate their Section 301 liability. The schemes vary in sophistication, but the underlying logic is consistent. Some U.S. firms find a way to make Chinese-origin goods appear to originate from somewhere else, or find a way to describe them so that the applicable tariff rate is lower than what the goods actually attract. Many, however, turn to the easiest way to adjust their tariff burden: false statements of cost of goods. False valuations can decrease customs duties paid, but they often come with a paper trail: invoice splitting” or even adjusted, editable invoices that result in two sets of financial records.

The imposition of additional tariffs in 2025 has intensified pressures, affecting companies’ behavior in a way that still matters, even after the invalidation of IEEPA tariffs. Companies that were once marginal compliers — cutting corners on documentation but not quite crossing into outright fraud — have faced a sharpened incentive to move further along the spectrum. Employees who tolerated minor irregularities in a lower-tariff environment may find that what once seemed like aggressive-but-legal customs planning now looks unmistakably like fraud.

Financial Records as Evidence: What We Have Seen Since 2011

In our very first customs case in 2011, we learned that fraudulent import behavior in the importation of goods from China can leave financial footprints that are extraordinarily difficult to conceal.

The core problem for any company engaged in tariff evasion is that it must maintain internally consistent financial records for purposes unrelated to customs — tax filings, audit requirements, lender covenants, investor reporting. Those internal records may reflect the actual “true” cost of goods, including the actual amounts paid to Chinese suppliers. They also frequently track tariff payments as a line-item expense. When those internal figures are compared against what the company reported to U.S. Customs and Border Protection, the gap between the two tells a clear story.

The Green Bag case we resolved in 2013 illustrated this dynamic as sharply as any we have encountered. A single-page profit and loss statement was sufficient to establish that the tariffs the company had reported paying were inconsistent with the volume and cost of goods it was actually importing. The math was not complicated — it was simply a matter of comparing what the financial records showed against what customs records reflected.

This is not an isolated phenomenon. Companies that source steel wire, aluminum extrusions, or finished metal components from China typically track their cost of goods sold, their supplier payments, and their tariff liabilities with considerable precision for internal purposes. When evasion is occurring, there is often a visible tension in those records — a cost-of-goods figure that implies a higher dutiable value than what was declared, or a tariff expense line that seems implausibly low relative to the volume of Chinese-origin goods purchased.

One key consideration involves the relationship between a U.S. company and its Chinese supplier. Close informal relationships can facilitate “invoice splitting,” or edited invoices. Formal relationships bring on other issues: when a buyer and seller are related parties, U.S. customs law requires that the transaction value reflects an arm’s-length price. Where it does not — where the invoice price is artificially suppressed to reduce the dutiable value — the importer underpays duties on every shipment.

What Whistleblowers Should Watch For

If you work at a company that imports steel, aluminum, or fabricated metal products from China — or from a third country that sources those materials from China — there are specific questions worth asking.

Does the company’s reported tariff expense seem proportionate to its procurement volume from Chinese or Chinese-linked suppliers? Has the origin of goods shifted to a third country without any apparent change in the underlying supplier relationships or manufacturing locations? Are employees being asked to use country-of-origin documentation that does not match what they know about where the goods were actually produced? Has the company’s effective tariff rate declined since 2018 or 2025 in ways that are not explained by legitimate sourcing shifts or exclusion applications?

Affirmative answers to any of these questions, particularly when supported by internal financial records that do not match customs filings, are the foundation of a viable qui tam case under the False Claims Act.

Speaking with an Attorney

The False Claims Act’s qui tam provisions allow private individuals to file suit on behalf of the United States and share in any recovery. In customs fraud cases involving steel and aluminum tariffs, relator shares in settlements have ranged from 15 to 30 percent of the government’s recovery. In a matter of the scale of Precision Cable Assemblies, that translates to a meaningful sum.

The first-to-file rule under the FCA means that timing matters. If you have original information about customs fraud involving Section 301 tariffs on steel or aluminum — particularly if you have access to financial records or internal documents that support the claim — the time to act is before someone else files. The possibility that a company may self-disclose can also be a significant consideration. We offer confidential, free consultations, and can help you determine if the False Claims Act can help protect you from retaliation.