Now that the Adminstrations new tariffs against Canada, Mexico and China are in effect, many U.S. importers may face complex issues in complying with the payment systems required for the import duties. The volume of the goods covered by the tariffs on imports from those companies for example are significant. Last year U.S. imports from China, Mexico and Canada totaled over $1.3 trillion. The new tariffs have added an additional 25% on imports from Mexico and Canada and another 10% on imports from China.
Importers must purchase a “custom bond” which is insurance that guarantees that the duties will be paid. Many customers importing larger volumes of goods will have to urchase more insurance on their bonds to cover the new tariffs.
There is an expectation that some importers may seek to evade tariffs by falsely stating the actual cost of the goods in their customs declarations or falsely state the country of origins. This may lead to whistleblower lawsuits under the False Claims Act (FCA “qui tam”). There have been many major settlements paid in these cases. For example, one company, Toyo Ink SC Holdings Co. Ltd. and various affiliated entities (collectively, Toyo Ink) have agreed to pay $45 million, plus interest, to settle allegations that they violated the False Claims Act by knowingly failing to pay antidumping and countervailing duties, the Justice Department announced today.
Toyo Ink, which has operations worldwide, is a leading provider of printing inks. The Toyo Ink parties to the agreement are the Japanese companies Toyo Ink SC Holdings Co. Ltd. (successor in interest to Toyo Ink Manufacturing Co. Ltd.), Toyocolor Co. Ltd., Toyo Ink Co. Ltd. and Toyochem Co. Ltd., and their United States affiliates Toyo Ink Mfg. America LLC (located in New Jersey), Toyo Ink International Corp. (located in New Jersey), and Toyo Ink America LLC (located in Illinois). The government alleged that Toyo Ink misrepresented Japan and Mexico as the countries of origin for its CVP-23 imports, rather than the People’s Republic of China (PRC) and India which were the company’s sources for raw CVP-23. Imports of CVP-23 from the PRC and India have been subject to these duties since 2004; there are no such duties on imports from Japan or Mexico. Although Toyo Ink’s CVP-23 from the PRC and India underwent a finishing process in Japan and Mexico before it was imported into the United States, the government alleged that this process was insufficient to constitute a substantial transformation to render these countries as the countries of origin.
The allegations were initially alleged in a whistleblower lawsuit filed under the False Claims Act by the president of a domestic producer of CVP-23. Under the False Claims Act, private citizens can sue on behalf of the United States and share in any recovery. He received more than $7,875,000 as his share of the government’s recovery.
Jeff Newman JD MBA, represents whistleblowers nationwide relating to major tariff fraud concerning imported Chinese goods as well as Medicare and Medicaid fraud cases under the False Claims Act (Qui Tam), and SEC, IRS and FINCEN whistleblower programs. He can be reached at Jeff@JeffNewmanLaw.com or at 617-823-3217
