The bipartisan House Select Committee on the Chinese Communist Party urged auto parts retailers on Sept. 6 to take caution in purchasing or selling parts from Chinese brand Qingdao Sunsong, which is currently subject to a federal investigation for trade fraud.
“U.S. retailers are responsible for ensuring their procurement practices do not inadvertently support companies engaged in tariff evasion or other unlawful trade practices. Such practices harm American manufacturers, undermine U.S. policy goals, and reward the Chinese Communist Party’s (CCP) unfair economic policies.”
The lawmakers say that Qingdao Sunsong is suspected of shipping Chinese products through Thailand in order to evade U.S. customs duties, which would undermine U.S. production and jobs.
Although items are marked “Made in Thailand,” Qingdao Sunsong states in its disclosures that the Thailand processing plants add between 12 cents and 23 cents of value to the products manufactured in China, or 4 to 8 percent of the assembly value.
This falls short of the “substantial transformation” required by the U.S. Department of Commerce that would allow the product to be marked “Made in Thailand” and subjected to lower tariffs.
Qingdao Sunsong’s U.S. headquarters in Ohio was raided by the Department of Homeland Security in January. The department said it executed a federal search warrant and did not provide further information about the ongoing investigation.
“Given prior congressional efforts to raise concerns about Qingdao Sunsong and the recent DHS raid of its U.S. facility, we are troubled by your company’s continued procurement of its products,” the lawmakers’ letter reads.
The lawmakers wrote that falsely reporting the countries of origin on products shipped to the United States is illegal, not only for the provider but also for companies “complicit in knowingly purchasing” these items.
If Qingdao Sunsong is shipping its parts through Thailand to avoid the 25 percent tariff the United States imposed on all automotive parts coming from China in May 2019, it is committing trade fraud.
Lawmakers asked the U.S. retailers whether and how they verified that the purchased Qingdao Sunsong parts had shifted country of origin from China to Thailand and whether Qingdao Sunsong represented to the companies that these parts were indeed manufactured in Thailand and not in China and then shipped from Thailand.
The lawmakers also noted they had warned U.S. companies of Qingdao Sunsong’s alleged trade fraud in September 2023, asking the companies whether they took steps to ensure that they were not complicit in illegal transshipment activity.
The lawmakers also asked the retailers to detail steps they have taken to make sure they are not buying goods from China made with slave labor, as required by the Uyghur Forced Labor Prevention Act, which went into effect in June 2022. The CCP is known to persecute ethnic and religious minority groups, such as Uyghurs, Christians, and practitioners of Falun Gong, subjecting them to human rights abuses including forced labor.
Lawmakers in recent years have called for and enacted more restrictions on Chinese imports, citing both security and human rights concerns.
