As the US government imposes higher tariffs, collecting taxes on imports becomes a complex issue, with smuggling on the rise and authorities struggling to keep up.
Tariff levels are higher than before President Trump took office, as his administration seeks to boost U.S. manufacturing and raise revenue.
However, collecting taxes on imports can be a complex issue. The federal agencies that screen imports are frequently overwhelmed and understaffed, which creates an environment conducive to smuggling.
Smuggling is the illegal transportation of goods, people, or materials across international borders.
It's a complex issue that involves various forms of contraband, from narcotics and firearms to currency and cultural artifacts.
According to the World Customs Organization, smuggling costs the global economy an estimated $1.3 trillion annually.
The most common methods used by smugglers include hidden compartments in vehicles, false bottoms in containers, and even using unsuspecting travelers as mules.
Trade experts say higher tariffs specifically against China have created more of a demand for smuggling. Companies may route their product through third countries to avoid paying American tariffs, as one auto parts company owner discovered. This practice is known as transshipping, and it can be difficult to detect.
U.S. Customs and Border Protection (CBP) is the primary federal agency responsible for collecting tariffs. However, the agency now has a lot more work to do due to global retaliatory and reciprocal tariffs, as well as the collection of new tariffs on low-value packages coming into the U.S. from Chinese e-commerce platforms.
CBP stands for Customs and Border Protection, a U.S. government agency responsible for regulating and facilitating international trade and travel.
CBP enforces customs laws, inspects cargo and passengers, and prevents the smuggling of goods and people into the United States.
With over 60,000 employees, CBP is one of the largest law enforcement agencies in the country.
Logistics specialists dispute CBP‘s readiness to enforce these taxes. They argue that the agency lacks the resources, workforce, skill sets, and supporting technologies to effectively inspect and enforce tariffs.
CBP has long suffered from chronic understaffing. The union that represents Customs and Border Protection agents warns that the agency is facing a surge in planned retirements soon, which would further deplete its ranks.
A former senior enforcement official at CBP notes that there is a long-term shortage of import specialists, each of whom needs one to two years of training to spot trade fraud. By law, CBP must have a minimum of around 1,000 import specialists, but the agency often fell short.
The import specialist shortage is a complex issue, driven by a combination of factors including aging workforce, lack of training programs, and increasing demand for international trade.
According to the Bureau of Labor Statistics, employment of logisticians, which includes import specialists, is projected to grow 6% from 2020 to 2030.
This growth rate is faster than the average for all occupations.
To address the shortage, companies are offering competitive salaries and benefits, as well as providing training programs for new hires.
Smuggling can be difficult to detect, and those who are caught may not face significant consequences. A family wire hanger business owner says that he has sent evidence of alleged trade violations to the Department of Homeland Security, only to have them ignored. He believes that people do not get caught due to a lack of resources and punishment.
Business owners and former DOJ officials argue that they need additional funding to prosecute trade fraud cases effectively. However, there is currently a government-wide hiring freeze and a mandate to cut the federal budget, initiatives championed by President Trump and his ally Elon Musk.
As a result, the DOJ’s trade fraud task force is leaderless, and agents are referring cases to it without sufficient resources to work on them. This creates an environment where smugglers can operate with relative impunity, leaving significant revenue uncollected.
