The Rising Risks of Customs Valuation and Tariff Compliance

For importers under pressure to manage margins amid rising tariffs, compliance missteps, even unintentional ones, can trigger severe penalties, criminal sanctions, and lasting reputational damage.

Recent high-profile cases show that even the most established brands are not immune. At one major logistics hub in Europe, authorities are investigating a leading sportswear manufacturer over its import valuation practices.

The issue centres around how the company structured transactions before goods entered the EU — allegedly calculating customs duties based on an earlier, lower sale price rather than the final transaction value, potentially underpaying significant duties and VAT. With potential liabilities reported at €1.5 billion, the case is a stark reminder that customs valuation errors can escalate into major legal and financial risks.

It’s important to recognise that the rules have evolved. While using an earlier sale value was once a common and accepted practice, EU authorities revised their stance in 2016, shifting firmly towards the “last sale” principle for determining customs value. Businesses that have not adjusted their processes accordingly are now exposed to greater scrutiny — and enforcement action.

The drive for stricter enforcement is not limited to valuation practices. Across the board, customs authorities now treat tariff evasion including undervaluation, transshipment, and misclassification with the same seriousness as tax fraud.

Consider a company importing consumer electronics from a high-tariff country. To reduce duties, it may consider declaring the goods under a low-tariff category such as “educational devices,” or submit an invoice showing less than the true value. While such schemes might be tempting and yield cost savings, they expose companies to major legal and financial liabilities.

Enforcement is ramping up globally
In March 2025, a federal court sentenced a Florida couple to nearly five years in prison for defrauding US Customs of over $42 million by routing plywood through Malaysia and falsifying documents.

In the same month, a San Francisco-based flooring company agreed to pay $8.1 million to settle allegations that it disguised Chinese flooring as Malaysian to evade antidumping and Section 301 duties.

In February 2025, a UK firm paid over £3.2 million to HMRC after exporting military goods without the necessary licences.

In December 2024, prosecutors raided another leading sports brand’s European headquarters, investigating alleged customs and VAT evasion worth over €1.1 billion.

What Importers Need to Watch
Following the April 2025 introduction of the US’s new tariff regime — with a 10% baseline tariff and stackable surcharges for many countries — authorities have intensified scrutiny of:

• Country-of-origin declarations
• Shipment valuations
• Tariff classifications

In the US, the False Claims Act allows for treble damages and substantial penalties where duties are knowingly underpaid.

In the EU, the Directive on Administrative Cooperation (DAC6) imposes disclosure obligations on cross-border arrangements that obscure transaction value or jurisdiction meaning that rerouting goods or mis-declaring valuations can trigger automatic reporting requirements.

Meanwhile, in the UK, the Criminal Finances Act introduces strict liability for companies that fail to prevent the facilitation of domestic or foreign tax evasion. Businesses must be able to demonstrate “reasonable procedures” to avoid criminal exposure.

How Metro Supports You
At Metro, our customs and compliance experts provide critical support to businesses navigating today’s complex trade landscape.

We help importers to:

• Verify country-of-origin declarations and supply chain transparency
• Ensure correct valuation methodologies are applied
• Review tariff classifications and supporting documentation
• Establish strong compliance frameworks, audit trails, and proactive reporting systems

Our goal is simple: to help you reduce risk, protect your reputation, and trade with complete confidence across any border.

In today’s environment, customs compliance isn’t just a technical obligation — it’s a strategic imperative.

To review your situation and learn how we can keep you compliant, while protecting your cashflow – please EMAIL Andy Fitchett, Brokerage Manager.