In the constantly changing world of global trade, compliance with customs duties is more than a bureaucratic requirement - it’s a strategic necessity for businesses. As governments across the globe strengthen enforcement on trade regulations and digitize customs systems, the hidden costs of non-compliance are growing more severe, impacting the bottom line, brand reputation and customer experience.

Trade Duty Refund, as a dedicated and specialized broker in customs duties, looks at some of these costs and how to mitigate the risk.

Beyond the Fine Print: what does non-compliance really cost

At first glance, non-compliance with customs duties might just seem like a matter of the occasional penalty or fine or possible shipping delay. But in reality, the costs ripple much further.

According to a 2023 report from PwC, non-compliance with customs regulations can result in fines that range from 5% to 30% of the value of the goods - but that is just the beginning. Late filings, incorrect tariff classifications, and failure to provide accurate origin documentation can trigger audits, retroactive duties and even seizing of products by authorities.

In the U.S. alone, the U.S. Customs and Borders Protection collected over $4.3 billion in penalties, seizures and liquidated damages in 2022, a number that is steadily rising.

Supply Chain Disruption

Modern supply chains rely on speed, predictability, and transparency. Non-compliance undermines all three. A single misclassification or documentation error can delay cargo by days or weeks. According to a 2023 report by DHL, 83% of logistics professionals say customs clearance issues are a top cause of international shipping delays.

These disruptions aren’t just logistical headaches—they can erode customer trust, especially in sectors like e-commerce, where delivery speed is a key differentiator.

The cost? Lost sales, reputational damage, and an increased risk of churn.

Reputational Risk and Business Continuity

With greater regulatory scrutiny comes heightened visibility. Customs non-compliance can attract unwanted attention from regulators and stakeholders alike.

Multinational companies have faced not only fines but public backlash when caught violating import/export regulations, particularly involving goods sourced from regions flagged for forced labor or trade sanctions. As a result, compliance is no longer just the responsibility of legal and logistics teams—it’s an issue for the C-suite.

A recent example of compliance and de minimis: the e-Commerce business

In 2023, U.S. CBP reported that de minimis shipments (under $800 in value) surged to over 1 billion entries, up 646% since 2015 - largely due to global e-commerce giants in China.

As a response, CBP began tightening enforcement on these shipments, particularly from China and Hong Kong, requiring formal customs declarations, duties, and compliance documentation that many sellers had previously bypassed. This crackdown illustrates how non-compliance with customs rules—whether intentional or due to poor oversight—can rapidly disrupt e-commerce operations, triggering:

• Delays at customs
• Confiscation of goods
• Loss of low-cost shipping privileges
• Financial penalties

Fashion and e-Commerce retailers that fail to adapt to stricter customs enforcement risk business continuity breakdowns, especially in markets where delivery speed and low prices are competitive differentiators.

Three Ways to Mitigate Customs Compliance Risk

To stay ahead, companies must treat compliance as a strategic function. Here are three ways to reduce exposure:

1. Invest in Technology: Implement automated customs compliance tools and AI-based classification systems to ensure real-time accuracy and reduce human error. A 2024 KPMG survey found that only 37% of companies have fully integrated trade compliance into their digital supply chain strategy.
2. Seek Expert Guidance: Work with customs brokers, trade attorneys, or specialized consultants to navigate complex international regulations and stay current with evolving laws.
3. Train and Align Teams: Ensure cross-functional training for logistics, legal, finance, and operations teams so everyone understands their role in compliance—and how it affects broader business goals.

Customs compliance is no longer just a legal formality; it’s a pillar of operational excellence and brand resilience. The hidden costs—delays, fines, lost customers, and damaged reputation—are too high to ignore. Companies that embrace compliance as a strategic asset, rather than a burden, will be better positioned to thrive in an increasingly regulated and transparent global trade environment.

Schedule a free discovery call with Trade Duty Refund to discuss your checklist for customs compliance.