Two Canadian steel companies will pay a combined US$19 million to settle allegations they skirted U.S. trade rules by mislabeling foreign steel to avoid import duties, the U.S. Department of Justice (DOJ) has announced.
The DOJ said Farjess Inc. and Royal Canadian Steel Inc., along with part‑owner and president Feroz Jessani, admitted to underpaying duties on flat‑rolled steel produced in Europe and Asia by falsely declaring the products as originating in Canada or the United States.
According to the government, the conduct occurred between May 2019 and January 2025 and involved steel the companies knew had been manufactured in China, Indonesia, Italy, Turkey or Vietnam. By declaring the material as North American in origin, they allegedly sidestepped higher tariffs that applied to those jurisdictions.
The case was initiated by a steel broker who used the whistleblower provisions of the U.S. False Claims Act to file a lawsuit on behalf of the United States. Under the settlement, that broker will receive roughly US$3.61 million, reflecting the statute’s requirement that successful whistleblowers be awarded a share of the government’s recovery.
“Import duties serve an important role in protecting our national interests generally and the American steel industry in particular,” U.S. Assistant Attorney General Brett A. Shumate said in the DOJ release. “The Department of Justice will zealously pursue anyone who fraudulently evades the duties owed on steel products imported into this country.”
For much of the period covered by the allegations, steel that complied with the Canada‑U.S.‑Mexico Agreement (CUSMA) was not subject to U.S. tariffs. That changed when President Donald Trump imposed a 25% levy on steel in February 2025 and later doubled the rate to 50%, extending the higher duty to CUSMA‑compliant imports as well.
The settlement underscores how aggressively U.S. authorities are now using customs, trade and whistleblower tools to police tariff evasion. It also comes as Canada, the U.S. and Mexico prepare for formal CUSMA review talks in July – a process that, as previously reported, is already putting Canadian boards and their directors’ and officers’ (D&O) liability exposures under closer scrutiny. Market sources have warned that some companies could face allegations of “tariff washing” – overstating their resilience to trade measures – while others may come under pressure to cut corners, including by diluting quality, in order to preserve margins as new tariff and compliance risks emerge.
