Global trade is more complex today than at any point in recent memory. With tariffs fluctuating across major markets, supply chains are under greater pressure to deliver goods at competitive prices while staying compliant. That pressure has opened the door for a growing problem: tariff dodging.

Tariff dodging might seem like a concern only for those directly cutting corners. But the reality is even companies that play by the rules can be caught in the fallout if their suppliers or partners engage in fraudulent practices.
That’s why every business involved in importing or global sourcing should understand exactly what tariff dodging is and, most importantly, how to avoid it.

Tariff dodging is the practice of bending or breaking trade rules to avoid paying full import duties. It might take the form of misclassifying goods under the wrong HS code, undervaluing invoices, or rerouting shipments through another country to disguise their true origin. What makes tariff dodging especially tricky is that third-party partners (suppliers, freight forwarders, or brokers) may be the ones cutting corners without ever telling the buyer. But that doesn’t remove the risk. If the fraud is uncovered, the business importing the goods can still face penalties, delays, and lasting reputational damage.

Tariff dodging often shows up in a handful of repeat patterns. Here are some common tactics that businesses should learn to recognize:

1. Transshipment
This is when goods are routed through a third country to disguise their true origin. For example, products made in China might be shipped through Malaysia before entering the U.S. to avoid China-specific tariffs.

2. Undervaluation
Here, importers declare a product at a much lower value than what was actually paid. On paper, the duty owed looks smaller, but it’s a case of fraud if discovered.

3. Misclassification
Every product has an HS (Harmonized System) code that determines its tariff rate. Some businesses intentionally misclassify goods under codes with lower duty rates, for instance, labeling finished electronics as “parts.”

4. False Origin Claims
The most blatant tactic is relabeling or misreporting the country of manufacture altogether. This can involve switching labels on packaging or falsifying certificates to make goods appear as if they came from a lower-tariff country.

New tariffs, 10% across the board and as high as 54% on Chinese imports, have made international trade more expensive than ever. According to eFulfillment Service, inflation, higher duties, and inventory challenges are pushing suppliers to cut costs, with some resorting to risky shortcuts just to stay competitive.

The impacts are visible in enforcement. In the first half of 2025, U.S. Customs and Border Protection issued 1,400 trade penalties, already on pace to surpass any year in the last five. The Wall Street Journal also reports that the DOJ has expanded its fraud unit to focus on customs and tariff evasion, backed by new whistleblower incentives.

Not every sector faces the same exposure. The risks are highest in electronics, apparel, auto parts, and consumer goods sectors that rely on complex, multi-country supply chains and carry higher tariff rates, making them more attractive for fraud. Shipments routed from countries like China, Vietnam, and Thailand face particular scrutiny, with regulators treating them as high-risk lanes for dodging activity.

There are some signs that tariff dodging might be taking place and here’s some signs not to overlook:

-Suspicious shipping routes.
-Prices that don’t align with market rates.
-Documentation mismatches (invoices, bills of lading, packing lists).
-Delays or circuitous routes.
-Reluctance from suppliers to disclose sourcing details.

Some warning signs are easier to spot than others. Suspicious shipping routes should always raise questions, especially when products pass through countries that don’t make sense for their origin. Prices that seem too low compared to the market can also signal undervaluation. And when invoices, packing lists, and bills of lading don’t match, that’s a strong sign something isn’t right.

Delays and unusual routes are another giveaway. Shipments that take longer than expected or follow paths that add no commercial value may be hiding something. But the biggest red flag is supplier behavior. If a partner avoids questions or hesitates to share sourcing details, that lack of transparency should be treated as a serious risk. Reliable suppliers don’t hide information.

–Vet suppliers: Confirm that your partners can actually deliver what they claim. Site visits, third-party audits, financials, licenses, and current certifications help validate their operations.

–Monitor shipments. Ensure there’s consistency in paperwork. Invoices, bills of lading, and packing lists should align without discrepancies. You might also want to use licensed customs brokers to review documentation and train your team to flag anything unusual.

–Ask questions. Ask suppliers where the goods are manufactured. What documentation supports that claim? Can your supplier list all production sites? What steps do they take to ensure compliance? Reliable suppliers will answer directly and back it up with proof.

At International Supply Partners, we take these steps to protect your business. Our team combines deep supplier networks with compliance expertise, helping you source confidently while shielding your business from hidden risks.