The PAIL Act: Protecting American Industry and Labor from International Trade Crimes
A bipartisan bill that creates a dedicated Department of Justice task force to criminally prosecute trade-related crimes — transshipment, undervaluation, misclassification, and duty evasion. The PAIL Act passed the House under suspension of the rules by voice vote last Congress. The House Judiciary Committee advanced H.R. 1869 by a 23–0 vote on June 3, 2026.
“American manufacturers, farmers, and workers are losing ground every day to foreign competitors who cheat their way into the U.S. market through customs fraud schemes — and our enforcement infrastructure has not kept pace with the scale of the problem.”
— Coalition for a Prosperous America, April 2026 letter to House Judiciary
The Enforcement Gap, in Numbers
CBP data tracked by the Alliance for Trade EnforcementNOW shows the scale of the problem PAIL is designed to address.
$400M+
In unpaid duties uncovered by CBP in the first seven months of 2025 through Enforce and Protect Act (EAPA) investigations.
$250M
Evaded duties in a single case: a network of Chinese shell companies routed goods through Indonesia, South Korea, and Vietnam — the largest EAPA case in CBP history.
Aug 2025
DOJ + DHS established the Trade Fraud Task Force by executive action. PAIL codifies that foundation into law for durable, cross-administration enforcement.
AEBA Fully Supports the PAIL Act
The PAIL Act and AEBA’s enforcement framework attack the same problem from two sides — criminal customs prosecution and civil income-tax enforcement. Together they form a complete enforcement architecture against foreign-seller abuse.
The PAIL Act Prosecutes Them
Criminal prosecution of customs fraud at scale.
A dedicated DOJ task force prosecutes transshipment, undervaluation, and misclassification — the schemes foreign marketplace sellers rely on to undercut American businesses. Criminal exposure changes the calculus.
AEBA Taxes Them
Apply existing domestic law to collect U.S. taxes owed.
AEBA advocates applying existing authority under IRC §864(b), the TCJA, and established withholding mechanisms (FIRPTA, §3406, §1441/1442) to ensure foreign sellers pay U.S. income tax on their U.S. marketplace revenue.
The Problem This Solves
Foreign producers and complicit importers evade U.S. duties through a predictable set of schemes: routing Chinese goods through third countries to disguise origin (transshipment), declaring false product categories to pay a lower tariff rate (misclassification), and reporting prices 10–20x below actual cost to minimize duty owed (undervaluation). Each scheme relies on the same premise: detection and prosecution are unlikely.
When duties are evaded, foreign sellers gain an artificial price advantage over American manufacturers who absorb the full cost of compliance. The result is that American companies who follow the rules are systematically outcompeted — not on efficiency or innovation, but on the willingness to break the law.
The Department of Justice designated trade and customs fraud a high-priority enforcement area and established a Trade Fraud Task Force with DHS in August 2025. But executive action alone can be reversed. The PAIL Act codifies that foundation into law — creating the durable statutory structure needed for consistent, long-term enforcement.
Key Provisions of the PAIL Act
Four structural changes that give DOJ the tools and the mandate to prosecute trade-related crimes at the scale the problem demands.
New DOJ Trade Crimes Task Force
Establishes a dedicated task force inside the Department of Justice to criminally prosecute trade-related crimes — transshipment, undervaluation, misclassification, and duty evasion — on a sustained, coordinated basis.
Creates the statutory foundation for prosecuting the exact foreign-seller conduct AEBA has documented across marketplace platforms.
Broad Statutory Scope
Defines “trade-related crimes” to cover violations of the Tariff Act of 1930, the Trade Expansion Act of 1962, the Trade Act of 1974, and the Countering America’s Adversaries Through Sanctions Act (CAATSA) — the full framework of U.S. import and trade law.
Aligns with AEBA’s position that existing law is sufficient — what is missing is enforcement will and infrastructure.
Focus on Transshipment and Fraud Schemes
Directly targets the shell-company, country-of-origin misrepresentation, and undervaluation schemes that have allowed foreign producers to evade duties and undercut American manufacturers for years.
Complements AEBA’s legal framework that treats marketplace fulfillment as a U.S. trade or business under IRC §864(b).
Durable Statutory Foundation
Codifies into law what the DOJ and DHS began by executive action in August 2025 with the Trade Fraud Task Force — ensuring consistent, long-term enforcement that survives changes in administration.
Establishes the kind of cross-administration durability AEBA advocates for on the tax-enforcement side through IRS guidance under existing authority.
How the PAIL Act Advances AEBA's Reform Package
PAIL directly addresses five of AEBA's reform priorities on the criminal enforcement side — complementing AEBA's civil tax enforcement framework.
AEBA Reform Point
PAIL Act Provision
Impact Level
Reform 06: Customs Enforcement at Scale
DOJ Trade Crimes Task Force for sustained prosecution
Reform 14: Anti-Fraud Measures
Codifies criminal enforcement for transshipment and undervaluation
Priority 07: Close the Enforcement Gap
Statutory foundation for long-term DOJ trade enforcement capacity
Reform 10: Data Sharing & Coordination
Task force coordinates DOJ, DHS, CBP enforcement
Priority 04: Retroactive Civil Duty Recovery
Criminal pipeline supports parallel civil recovery under 19 USC §1592
Organizations Backing the PAIL Act
A broad bipartisan coalition of trade, manufacturing, and enforcement-focused organizations supports this legislation.
Coalition for a Prosperous America (CPA)
A bipartisan trade policy organization representing domestic producers, manufacturers, workers, and farmers. Author of the April 2026 letter to the House Judiciary Committee urging markup.
Alliance for Trade EnforcementNOW
An alliance advocating for stronger, data-driven enforcement of U.S. trade laws. Tracks CBP EAPA enforcement and documents transshipment schemes in real time.
American Iron and Steel Institute
Represents the U.S. steel industry, which has been among the most affected by AD/CVD duty evasion through third-country transshipment.
Domestic Manufacturing Coalition
Broad coalition of U.S. manufacturers across industries that have publicly supported the legislation in both the 118th and 119th Congresses.
Legislative History & Status
118th Congress (2023–2024)
Introduced as H.R. 9151. Passed the House under suspension of the rules by voice vote — a strong show of bipartisan support. Did not reach the Senate floor before the session ended.
119th Congress (2025–2026)
Reintroduced as H.R. 1869 on March 5, 2025 by a bipartisan coalition led by Rep. Ashley Hinson (R-IA), with House Select Committee on the CCP Chairman Rep. John Moolenaar (R-MI) and Rep. Ro Khanna (D-CA) among the prominent co-leads. In April 2026, the Coalition for a Prosperous America and the Alliance for Trade EnforcementNOW sent a formal letter to Chairman Jim Jordan and Ranking Member Jamie Raskin urging the Committee to schedule markup. On June 3, 2026, the House Judiciary Committee advanced the bill by a unanimous 23–0 vote.
PAIL prosecutes them. AEBA taxes them.
Together we close the enforcement gap.
The PAIL Act creates the criminal enforcement foundation American industry needs. AEBA’s framework applies existing tax authority under IRC §864(b) to recover $9–$60 billion annually. Together they cover customs and tax, criminal and civil — with no legal gap between them.