Tariff mistakes that could land you in Jail

A lot of sellers are panicking right now because of the tariffs. 

They're resorting to subreddits, Facebook groups, and even talking to their overseas suppliers for advice.

Today, I want to share three popular "methods" to reduce tariffs that you absolutely should not do, and I'll walk you through the reasons why. 

These are greyhat to blackhat tactics in Amazon-speak.

By the way, right now, U.S. Customs and Border Patrol (CBP) has tightened the screws and is intensifying their audits. 

They're even offering rewards for whistleblowers who report customs fraud!

According to international trade attorneys at Harris Sliwoski LLP, these practices are serious federal crimes that can result in: 

Customs Fraud (18 U.S.C. §§ 541, 542): False statements or documents used to mislead CBP, with penalties including imprisonment for up to 2 years per violation 

Smuggling (18 U.S.C. § 545): When goods are imported through deception, with penalties including up to 20 years imprisonment 

Wire Fraud (18 U.S.C. § 1343): Using electronic communications to support fraudulent import schemes 

Criminal Forfeiture: Seizure of goods, bank accounts, and even your entire business assets

Tactic 1: Under-declaring Invoice Values

Many times, a foreign or Chinese supplier suggests this tactic. For example, on a $10 FOB product, they might claim it's okay to put $2 on the commercial invoice, aiming to reduce tariffs and duties.

Let me be clear—this is lying and customs fraud.

U.S. Customs and Border Patrol is not stupid. 

They have records and algorithms designed specifically to catch this. 

Especially right now, during a period of intensified scrutiny, this practice is easily spotted.

And if you do get caught not only will you have to pay a hefty fine of up to 5x or 10x of the tariff value but they could run a 5 year audit of your imports.  

Imagine the paperwork and headaches that would bring. 

Bottom line: This could jeopardize your entire business.

Tactic 2: Transshipment (False Country of Origin)

Take a look at this subreddit thread where someone asked:

“Has anyone shipped from China to Mexico to the USA?”

“The idea is to ship from China to Mexico, perform minimal assembly or repackaging, and then ship into the U.S. hoping to claim “Made in Mexico” for lower or no tariffs.”

The definition of country of origin is clear—it's the place where the majority of labor and manufacturing occurs.

Simply passing products from China through another country like Mexico does not qualify.

Creating a false country of origin to evade tariffs is equivalent to tax evasion and is illegal.

Supply chain expert Dan Krassenstein says 

“If you get caught, you, as the importer of record, are the one who will pay the price. Your China supplier has little to lose – you would have everything to lose.” 

Takeaway: I strongly advise against risking your business in this way.

Tactic 3: Misclassifying Your HST Category

"Tariff engineering" has become a hot topic. This practice involves classifying your products under the lowest possible tariff code to reduce your duties legally.

However, some sellers are filing their HST codes under entirely unrelated categories. This is illegal.

My recommendation: Work closely with your customs broker—they should be your best friend right now. Just as you’d consult an accountant for maximizing tax write-offs, your broker will help optimize your HST codes legally.

But let me stress this again: 

Do NOT misclassify your products intentionally to reduce tariffs. 

CBP will likely audit you, resulting in fines, delays, and extra storage costs.

Key takeaway:

Don't bend or break the law. 

CBP is vigilant, and unethical practices risk severe penalties.

Fortunately, there are legitimate ways to stay profitable and strengthen your business despite tariffs. 

That’s why I created the Tariff Profitability Challenge for e-commerce sellers.

Over 14 days, you'll stop the profit bleeding and start increasing your margins without resorting to blackhat tactics that break the law and land you in jail.

Gary

PS: Doors close Sunday night and the Challenge begins Monday! Join now