Central Louisiana News

U.S. Senator Bill Cassidy (R-LA) and U.S. House of Representatives Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party Chairman John Moolenaar (R-MI-02) and Ranking Member Raja Krishnamoorthi (D-IL-08) have expressed significant concerns regarding U.S. auto part firms purchasing products from Qingdao Sunsong, a company based in the People’s Republic of China (PRC), and its U.S.-based subsidiary, which is under federal investigation.

Public reports indicate that federal authorities raided Qingdao Sunsong’s U.S. subsidiary in January, suspecting the firm of illegally transshipping its Made in China products through Thailand to evade U.S. customs duties, undermine American producers, and eliminate key American manufacturing jobs.

“Public company disclosures reveal that U.S. auto part retailers like AutoZone, Advance Auto Parts, and O’Reilly Auto Parts account for more than 40% of [Qingdao Sunsong’s] sales,” stated the lawmakers. “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 (CCP)’s unfair economic policies.”

The lawmakers further noted that foreign importers who falsify country-of-origin labels on their products face criminal and civil penalties under 19 U.S.C. § 1592. They emphasized that companies knowingly purchasing unlawfully transshipped products also face serious legal consequences.

Cassidy, Moolenaar, and Krishnamoorthi were joined by Senators Sherrod Brown (D-OH) and Representatives Darin LaHood (R-IL-16), Glenn Ivey (D-MD-04), and Ashley Hinson (R-IA-02) in signing a letter addressed to leaders of AutoZone, O’Reilly Auto Parts, Genuine Parts Company, Advance Auto Parts, First Brands Group, and Factory Motor Parts.

The letter highlighted ongoing concerns about Qingdao Sunsong's efforts to circumvent Section 301 tariffs by transshipping goods through Thailand with minimal transformation before entering the United States.

Reviews of Qingdao Sunsong’s public disclosures revealed consistent patterns of trade fraud harming American manufacturers. In response to Section 301 tariffs imposed on its rubber hose assembly products in 2019, Qingdao Sunsong established a facility in Thailand to bypass these tariffs.

In June 2022, Qingdao Sunsong applied for public listing on the Beijing Stock Exchange (BSE). During this process, it confirmed shifting production from China to Thailand to reduce tariff costs for its U.S. subsidiary.

The disclosure indicated that processing by Virayont Group Co., Ltd., one of Qingdao Sunsong's partners in Thailand added only between 12 cents and 23 cents to the value of power steering hose assemblies—a figure below what qualifies as “substantial transformation” as defined by the U.S. Department of Commerce.

Engaging in transshipment to evade tariffs constitutes a criminal violation under U.S law posing threats to American economic security.

Given prior congressional efforts raising concerns about Qingdao Sunsong and recent DHS actions against its U.S facility; lawmakers urged auto part companies involved with Qingdao Sunsong's products to ensure compliance with trade laws while maximizing value for customers without violating regulations.

They requested written responses from these companies no later than September 20th regarding their due diligence practices for detecting tariff evasion within their supply chains.

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