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Lawmakers in Letter Warn U.S. Auto Parts Companies Against Illegally Importing Chinese Products That Skirt Tariffs

Parts of a car. China Auto Exhibition at Chongqing Science and Technology Museum, in Chongqing. (Phot:© Liz Lee|Dreamstime.com)

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By The Select Committee on the Chinese Communist Party

September 19, 2024
5:03 pm
Los Angeles, CA

WASHINGTON, D.C. — Ranking Member Raja Krishnamoorthi (D-IL) and Chairman John Moolenaar (R-MI) of the House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party on Wednesday sent a bipartisan, bicameral letter to leaders of AutoZone, O’Reilly Auto Parts, Genuine Parts Company, Advance Auto Parts, First Brands Group, and Factory Motor Parts. In the letters, Moolenaar and Krishnamoorthi raise serious concerns that the firms are purchasing products from Qingdao Sunsong – a company based in the People’s Republic of China (PRC) – and its U.S. based subsidiary that is currently subject to a federal investigation. Public reporting has revealed that federal authorities raided Qingdao Sunsong’s U.S. subsidiary in January and that the firm may be illegally transshipping its Made in China products through

U.S. Senators Bill Cassidy (R-LA) and Sherrod Brown (D-OH), and Reps. Darin LaHood (R-IL), Glenn Ivey (D-MD), and Ashley Hinson (R-IA) joined the lawmakers inquiry.

In the letters, the bipartisan group write, “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 [Quingdao Sunsong’s] sales. 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.”

They continue, “Foreign importers that knowingly falsify the country of origin label on their products are subject to criminal and civil penalties, including significant fines and penalties under 19 U.S.C. § 1592. Companies found complicit in knowingly purchasing unlawfully transshipped products also face serious criminal and civil liability. 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.”

In light of the mounting evidence that these U.S. auto part suppliers are purchasing illegally transshipped Chinese products, the lawmakers seek answers to the following questions:

Did your company purchase any products from Qingdao Sunsong before May 10, 2019, when the United States implemented 25% tariffs on automotive parts from the PRC under Section 301?
How did your company verify Qingdao Sunsong’s claimed shift of Country of Origin (COO) from China to Thailand after the 25% Section 301 automotive tariffs were implemented?
Did Qingdao Sunsong inform your company that it shifted production from the PRC to Thailand?
Did your company increase purchases from Qingdao Sunsong after the imposition of 25% tariffs in May 2019; after a congressional letter warned of Qingdao Sunsong’s likely illegal transshipment practices in September 2023; or after DHS executed a search warrant at Qingdao Sunsong’s U.S.-based subsidiary in January 2024?
Do you plan on increasing your purchases of Qingdao Sunsong products in the future? Please provide a detailed accounting of your procurement of Qingdao Sunsong products since May 10, 2019.
Are there other instances in which your company has engaged in commercial relations with suppliers who are under investigation for trade fraud?
How has your company specifically responded to allegations of Qingdao Sunsong’s transshipment and the ongoing DHS investigation?
Based on the allegations, did you request that Qingdao Sunsong obtain a COO ruling by CBP?
Did supply chain professionals from your company visit Qingdao Sunsong in Thailand? If so, did they conclude definitively the COO of the products that your company purchased from that facility?
How does your company conduct due diligence of its suppliers to ensure all products comply with U.S. trade laws?
What was your company’s percentage of COO PRC product purchases vs. total purchases in 2019 and 2023?
What percentage of your company’s COO PRC product supply changed to another COO after the United States implemented 25% Section 301 automotive tariffs in 2019?
Please provide a detailed description of your company’s due diligence process for detecting and preventing the procurement of goods that are produced with forced labor, including those prohibited entry into the United States under the Uyghur Forced Labor Prevention Act.