Section 301 Tariff Fraud: The Same Goods, a Different Duty

Section 301 tariff fraud hides an additional duty by changing what U.S. Customs and Border Protection is told about the goods. A Chinese product becomes Taiwanese on the entry. A product code changes while the product stays the same. Same goods, a different bill. If the factory correspondence, sales catalog or instructions to the broker tell a different story from the declaration, an insider may already know where the duty disappeared. The competitor paying duty on the real origin or product carries a cost the dishonest importer escaped. Taxpayers are left with the shortfall.

What Is Section 301?

Section 301 is a trade-enforcement power under the Trade Act of 1974. It allows additional duties in response to foreign practices that burden American commerce. Those duties sit on top of the ordinary tariff calculation, which depends on the product, its value and its origin.

The ordinary Harmonized Tariff Schedule code identifies the goods. The additional duty appears under Chapter 99 of the schedule alongside that classification. A false code can change both the ordinary duty and whether the additional duty appears at all. That makes Section 301 one part of a customs fraud inquiry: what did the company import, what did it declare, and what did those declarations do to the bill?

Ceratizit’s Tungsten Carbide and the Unpaid Duties

Ceratizit USA agreed to a $54.4 million settlement over alleged duty evasion on tungsten carbide products, according to the Justice Department’s December 18, 2025 announcement. The company distributes a hard, wear-resistant material used to manufacture cutting tools and other components. The settlement agreement separates the allegations into origin, classification and marking, each with its own period.

Chinese Goods Routed Through Taiwan and Declared Taiwanese

The Section 301 allegations concerned Chinese goods routed through Taiwan and declared Taiwanese between August 7, 2020 and March 1, 2024. The government alleged that Ceratizit knew its supplier had manufactured the products in China and transshipped them through Taiwan before sending them to the United States.

That alleged false country of origin changed the tariff treatment without changing the goods. Customs’ Section 301 FAQ puts the distinction plainly: the duties turn on country of origin, not country of export. Routing goods through another country does not change where they were made.

The whistleblower’s complaint described an earlier shipping shift. It alleged that almost all sea shipments began coming from Taiwan instead of Xiamen, China, in October 2018, a month after the tariffs began.

Taiwan allegedly neither had nor imported enough raw materials to make that volume of rods. The complaint also questioned the supplier’s manufacturing capacity:

CB-Ceratizit does not have sufficient manufacturing capabilities in Taiwan to make the volume of rods that have been imported into the United States.

Whistleblower’s complaint, United States ex rel. Mark Alan Stover v. Ceratizit USA, Inc.

That is the production question behind a third-country shipping route: what factory made the goods, with what materials and what capacity? A certificate tells the buyer a country. Production and purchasing records can show whether that country could have supplied the goods described.

A Duty-Free Code for a Different Product

The government alleged that Ceratizit used HTS code 8311.90.00, with a general duty rate of free, instead of 8209.00.00, which carried a 4.6% general rate.

The complaint made the product difference concrete. It alleged that the code used described tungsten carbide EDM electrodes or tungsten electrodes for TIG welding, while the goods actually imported were tungsten carbide rods. That is a useful way to understand HTS misclassification fraud: the entry describes one product, while the business buys and sells another. Here, the government put the ordinary-duty allegation alongside the separate China-origin allegation.

Unmarked Goods and a Separate Unpaid Duty

The government alleged that Ceratizit imported products without country-of-origin markings and distributed them without paying the separate marking duties. The marking duty is 10% of the goods’ value.

The complaint described test purchases in September 2019 and September 2020. In both, the whistleblower alleged that neither the rods nor their packaging identified the country of origin. That made the physical goods and packaging part of the evidence, alongside the import declarations.

A whistleblower started the case. The agreement provided for a $9.75 million whistleblower award.

False Origin Can Travel With a False Value

Other import cases show how the declarations can work together. In the Justice Department’s resin-import settlement agreement, Global Plastics and Marco Polo International faced allegations that Chinese resin was declared as originating in Taiwan, Saudi Arabia or the United States, and that incorrect values reduced duties and fees. The government’s allegations included unpaid Section 301 duties.

Undervaluation and double invoicing affect another part of the same bill. The supplier’s real invoice can go to accounts payable while a lower invoice goes to the customs broker. For the employee who sees both, the payment records explain a discrepancy the entry alone conceals.

Which Tariff Was Owed on the Entry Date?

In tariff fraud, the applicable duty depends on the goods and their entry date. We compare the declared bill with the duty owed under the notices that governed those entries, including any claimed exclusion. The tariff entry date matters to the Section 301 and Section 232 layers of the bill as well as the ordinary duty.

Arrival, release and the entry summary are separate events. An invoice or sailing date can fall before a rate change even when the goods enter afterward. That is why the entry type and timestamps matter alongside the shipping documents.

We connect the product, any exclusion claimed and the entry period with the bills of lading, entries and payment records to establish which duty went unpaid.

Section 301 Tariff % by List

The China Section 301 tariff percentages by list are 25% on Lists 1, 2 and 3, and 7.5% on List 4A, before product-specific increases and exclusions. List 3 began at 10% in September 2018, and its rate increased in May 2019. The same false origin could therefore avoid a larger duty on later entries.

The review increases published in September 2024 also changed particular products: electric vehicles rose to 100% that September, and semiconductors to 50% in January 2025. The product and entry period determine which rate belongs in the calculation.

Are 301 Tariffs Only for China?

No. The Section 301 forced labor action added duties beyond China effective July 24, 2026. It targeted economies’ failures to prohibit or effectively stop imports made with forced labor.

What Countries Does Section 301 Apply To?

The China tariff lists cover Chinese goods. The separate forced labor action also reaches goods from economies including the European Union, Taiwan, Japan, Korea, Switzerland, Canada, Mexico and the United Kingdom.

For the European Union and Taiwan, the additional rate is 10% less the ordinary duty rate. For Japan, Korea and Switzerland, it is 12.5% less that ordinary rate. Where the ordinary rate already reaches the relevant threshold, this additional duty is zero.

Are the Section 301 Tariffs Still in Effect?

Yes. The February 20, 2026 order ending emergency-powers tariffs expressly left Section 301 and Section 232 duties in place. The later forced labor action added another dated basis for Section 301 duties.

Tariff Refunds Leave the Other Duties in Place

Tariff refunds for the emergency-powers duties remove that part of the entry’s bill. Customs’ refund guidance describes removing those duty classifications and recalculating the entry. Section 301 and Section 232 duties remain separate obligations. A refund of one duty does not explain why another went unpaid.

What Evidence Is Needed to Prove Fraud?

The useful evidence connects the physical product to the declaration and the people who supplied its details. The factory record can identify the producer. The supplier invoice and payment ledger show what was bought and paid for. The catalog describes what the business sold. The broker’s instructions show what Customs was supposed to be told.

The government receives several accounts of the same shipment, too. Before ocean cargo is loaded, the Importer Security Filing identifies the manufacturer or supplier, country of origin, product code and stuffing location. The carrier files a separate manifest identifying the shipper, cargo and ports. The entry summary, CBP Form 7501, declares the value, classification and duty rate. Those records come from different parties at different times. A changed country or description becomes much more useful when the invoice and shipment identifiers connect it to the same goods.

Are Customs Records Consistent Across Countries? Evidence from the U.S. and Colombia, published by the U.S. Census Bureau’s Center for Economic Studies in 2020, found that matching trading firms across countries worked much better than matching their individual shipments. Its recommendation gets down to the document:

The two most promising candidates for this type of standardized identifier are invoice numbers and manifest numbers.

Are Customs Records Consistent Across Countries? Evidence from the U.S. and Colombia, U.S. Census Bureau, Center for Economic Studies, 2020

Public trade data help locate the flow worth examining. The World Customs Organization’s Mirror Analysis and Revenue Fraud, 2015 describes using gaps between countries’ reported trade to select specific products and routes for investigation. The next question is the one the Ceratizit complaint asked: could the claimed producer actually make the goods being shipped?

Who Knew the Country or Product Code Was Wrong?

Supplier messages may identify the factory while instructions to the customs broker handling the entry specify another country. Internal product descriptions may name goods differently from the entry. Audits, advice and the response after a concern was raised help explain what decision-makers knew or deliberately avoided learning.

The response after discovery can matter as much as the original instruction. In Grosfillex, the government’s furniture-component allegations included earlier declarations allegedly left uncorrected after the company learned they were false. A business can learn that duties went unpaid and decide to leave the bill that way.

Knowingly concealing or avoiding money owed to the government is the connection to a case under the False Claims Act.

Who Can File a Qui Tam Lawsuit?

Employees and competitors can bring customs whistleblower cases. An employee may hold the filing instruction or invoice. A competitor may know the product, its actual manufacturer and the cost of bringing it into the country with the duty paid. That commercial knowledge gives the investigation a place to start.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

Sources

The Instruction Behind the Entry

If you know who changed the country or product code while the goods stayed the same, speak with our Whistleblower Experts about the instruction behind the entry. We work beside you throughout the case, building the evidence of unpaid duties and bringing in customs fraud whistleblower lawyers who understand the tariff issues your records expose.

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