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Customs Penalties and Fines: Know Before You Ship

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Get informed on customs penalties and fines with this helpful guide. Learn how to avoid customs violations penalties.
September 12, 2023
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Last Modified: March 21, 2024

Customs penalties and fines can be difficult for even the most seasoned importers to avoid. One misstep, and you’re not just looking at hefty financial penalties; the ripple effects can hurt your business. The challenges of staying afloat after being fined include dealing with damage to your reputation as well as cash flow issues.

U.S. Customs and Border Protection (CBP) stipulates strict regulations for imports. Non-compliance can lead to customs penalties and fines. These measures safeguard trade integrity, ensuring that goods entering the United States adhere to local laws. Overlooking details can have financial consequences for importers.

Our guide to customs penalties and fines will help you know what mistakes to avoid in this complex business.

What are Customs Penalties and Fines?

A CBP inspector noting customs penalties and violations.

U.S. customs penalties refer to corrective measures for violations, which can include imprisonment. Customs fines are monetary penalties assessed by CBP. These punitive measures hold significant sway in global trade. They ensure the smooth flow of goods and legal compliance. 

For a clear image of how much money CBP gathers in fines each year, take a look at the following table.

Fines Assessed by Customs and Border Protection

YearTotal Fines Assessed in USD
2018$42.2 million
2019$43.1 million
2020$44.6 million
2021$132.2 million
2022$77.7 million


The last two years have shown a dramatic increase in the CBP’s fine collection, perhaps as a result of increased trade and e-commerce businesses now importing. 

To avoid allowing your profits to be part of those statistics, we should first define what counts as a customs violation.

What is Considered a Customs Violation?

Any disregard for customs laws and regulations counts as a customs violation. These violations aren’t just deliberate attempts to get around import laws. Any mistake in the customs process could lead to a violation. Understanding these violations can prevent mistakes from hurting your bottom line.

Some of the most common customs violations include:

  • Failure to declare
  • Inaccurate transaction records
  • Merchandise violations
  • Incorrect country of origin
  • Undervaluing products

Each of these violations merits a detailed explanation and a description of possible fines and penalties.

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What Happens if you Fail to Declare at Customs?

Navigating the customs process requires attention to detail. A pivotal part of this is the declaration of goods. This lets customs agents know what you’re bringing into a country. But what if something slips through the cracks? Even innocent oversights will trigger a violation.

Let’s delve into the repercussions and the importance of full disclosure.

  • Honesty is the best policy. The U.S. Customs Service expects accurate declarations of imported goods. Incomplete or false customs declarations can lead to penalties, delays, and product seizures. Seized products may incur liquidated damages.
  • Penalties for inaccurate declarations can range from fines to seizure of goods. In severe cases, legal action may be pursued.
  • Undeclared or falsely declared items can cause delays in shipment. Merchandise may be held up for inspection and verification. 
  • Consistent failures to declare imported goods can harm your standing with customs authorities. This can lead to more scrutiny and customs detention in future imports.
  • Customs records can be shared between countries. A violation in one country can affect your import processes in another.

It’s crucial to ensure every item is accurately declared to customs to avoid issues. Doing so will maintain your business’s reputation, and ensure a seamless import process.

What’s the Importance of Proper Record Keeping?

Two individuals reviewing customs paperwork.

Proper record keeping stands as a cornerstone for any successful importer. This process can prevent loss of revenue during a CBP audit by providing an accurate record of all shipment details. Inaccurate records can result in fines years after a transaction takes place.

Some benefits of keeping your books in order include:

  • Showing Compliance: Maintaining accurate records shows CBP that your business has complied with all customs regulations. It’s your evidence that everything was done by the book.
  • Financial Accuracy: Detailed records ensure that you have accounted for all fees, tariffs, and duties. This not only helps in budgeting and financial forecasting, but also ensures that you’re not overpaying or underpaying any dues.
  • Dispute Resolution: If you have a disagreement with customs, comprehensive records can provide clarity. Your documents can aid in swift dispute resolution and keep delays to a minimum.
  • Long-term Analysis: Over time, well-kept records offer insights into shipping patterns and areas of improvement. Businesses can use this information to create data-driven strategies.

Always make sure your records are accurate and up to date. If CBP decides to audit your shipments, you’ll be prepared.

What You Need to Know About Merchandise Violations

Essentially, a merchandise violation is any misrepresentation of the imported merchandise in question. Whether done on purpose or accidentally, violations can result in penalties. 

Examples of common merchandise violations include:

To illustrate how an instance of merchandise violation might play out, consider the following scenario.

  • A company imports a batch of smartwatches. 
  • Customs selects the shipmentfor a routine random inspection. 
  • Officials find that these smartwatches closely imitate a patented design of a renowned brand and lack the required safety certifications. 

This is a merchandise violation on two fronts: counterfeit infringement and failure to meet safety standards. The importer may face multiple charges in a single shipment. A fine for each counterfeit item, legal action from the infringed brand, and confiscation of the entire shipment.

Ensuring compliance begins with thorough research. Know the regulations for the type of merchandise you’re importing. This involves understanding labeling requirements, safety standards, and ensuring that you’re not infringing on any patents or trademarks.

Customs Country of Origin Rules and Penalties

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‘Country of Origin’ refers to where a product is manufactured, produced, or grown. This is used to calculate certain duties and taxes on goods imported to the U.S.

Some important elements of country of origin in importing include:

  • Marking Requirements: CBP mandates that every imported item should be clearly  marked with its country of origin. This is to ensure that consumers are informed about where a product comes from.
  • Changes in Origin: If a product undergoes significant change in a second country, its origin might change. For instance, if raw materials from one country are substantially transformed in another, the latter may become the new country of origin.
  • Penalties for Misrepresentation: Listing the wrong country of origin can lead to severe repercussions. These penalties usually include fines and seizure of goods.

It’s essential to maintain clear lines of communication with suppliers and keep accurate records to verify the origin of products. If you’re uncertain about a product’s origin, consulting with a customs broker can provide clarity.

Find out more about country of origin in our guide to import compliance.

Undervaluing Imported Goods: A Common Pitfall

The prospect of lowering costs can tempt businesses to undervalue imported goods. At face value, it might seem like a clever strategy to reduce payable duties, but the implications of such an action can have long-lasting consequences.

Consider what it really means to devalue goods: 

  • Definition: Undervaluing goods refers to the practice of declaring a product’s value below its actual market or purchase price when importing it. This can be done by understating the product’s quantity, quality, or cost.
  • Why Some Businesses Take the Risk: By declaring a lower value, businesses might think they’re paying less at customs checkpoints, thereby saving money.

The consequences of undervaluing goods can include:

  • Hefty Penalties: CBP is vigilant about ensuring businesses pay their fair share of duties. If caught undervaluing, businesses face fines that far exceed the amount they would have initially paid in duties.
  • Delayed Shipments: Suspicion of undervaluation can result in delayed clearance. This not only ties up goods at ports, but can also disrupt supply chains.

It’s also worth noting that suppliers may play a role. Some sellers will undervalue their goods to make them more attractive to buyers. 

Whether the importer is aware or not, they will still need to deal with the penalties. Clearly, it’s in your best interest to properly value your merchandise. Doing so will keep you from incurring fines from CBP and help build your business’s reputation.

Custom Duty Evasion: Reviewing Customs Violations Penalties

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Each of the violations listed above can be categorized under the umbrella term ‘custom duty evasion’. When done on purpose, they constitute a deliberate effort to underpay duties and taxes on imported goods.

Unfortunately for well-intentioned importers, CBP draws little distinction between deliberate efforts and honest mistakes when it comes to assessing penalties. Given the complexity of import laws, there are plenty of opportunities for errors to be made. How can an honest businessperson avoid gross negligence and violations? 

5 Ways to Avoid CBP Penalties

The following five best practices will go a long way toward keeping your shipments compliant with CBP regulations.

  1. Regularly Update Yourself on Customs Regulations: CBP regulations are not static. They evolve in response to global trade dynamics and security concerns. To avoid accidental violations, consistently check the CBP website or subscribe to trade newsletters.
  2. Attend Industry Seminars: Industry seminars offer hands-on learning experiences. These events giver importers a platform to ask questions and network with industry experts. Attending a seminar, in person or remotely, is a stellar learning opportunity.
  3. Maintain Accurate Records: Documentation is crucial to the business of importing. Good record keeping helps you stay organized, and it’s also invaluable during audits or inspections.
  4. Obtain Necessary Licenses and Permits: Whether you’re importing textiles, electronics, or agricultural products, ensure that you’ve secured the necessary permissions beforehand. Without the right permits, you can easily incur fines and detention of goods.
  5. Partner with a Customs Broker: A customs broker is a seasoned professional in the world of importing. Their expertise can help streamline the clearance process. An experienced broker can be a buffer between your business and customs penalties.

Out of all these tips, partnering with a broker is the most effective. The advantages of working with an expert in customs brokerage far outweigh the potential costs.

Benefits of Hiring a Customs Broker

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Customs brokers are facilitators in the import business. They work with importers to ensure fast and accurate clearance at customs. 

Among the many benefits from working with a licensed broker are:

  • Expertise in Compliance: Brokers are well-versed in the latest customs regulations. Using this knowledge, they ensure your shipments comply with all requirements and avoid violations.
  • Time Savings: Rather than spending hours deciphering complex regulations, customs brokers handle paperwork and procedures efficiently. This frees you up to focus on the core of your business and your customers.
  • Cost Efficiency: With their knowledge of tariffs and duties, customs brokers can help businesses minimize costs and avoid overpayment.
  • Reducing Delays: Customs brokers are skilled at avoiding clearance issues, ensuring shipments aren’t held up at ports without due cause.
  • Valuable Networks: Brokers often have established relationships with customs officials and related agencies. These relationships enable smooth communication and quick resolution of issues.
  • Tailored Services: A reputable customs broker can provide personalized solutions based on your specific industry and business needs, ensuring optimal handling of shipments.

If you’re ready to let an experienced customs broker handle the ins and outs of clearance on your behalf, USA Customs Clearance is here to help.

Discover even more benefits to partnering with a customs broker here.

Why Choose USA Customs Clearance for Expert Consultation?

Customs penalties and violations can add up quickly, but staying informed and working with brokerage experts can make the difference between success and failure.

At USA Customs Clearance, you’ll find a team of experts who are ready to help you achieve success in international trade. Look to us for help with:

Don’t let customs fines, penalties, and forfeitures cut into your bottom line. Partner with the pros at USA Customs Clearance. Call us at (855) 912-0406 or get a risk-free quote online today!

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