U.S. House Select Committee on the Chinese Communist Party Chairman John Moolenaar (R-MI) and Ranking Member Raja Krishnamoorthi (D-IL) have sent a bipartisan, bicameral letter to leaders of AutoZone, O’Reilly Auto Parts, Genuine Parts Co., Advance Auto Parts, First Brands Group, and Factory Motor Parts to raise concerns about alleged evasion of tariffs.

The Congressmen allege that the companies are purchasing products from Qingdao Sunsong — a company based in the People’s Republic of China (PRC) and owner of a U.S.-based subsidiary under federal investigation.

Public reporting has revealed that federal authorities raided Qingdao Sunsong’s unnamed subsidiary in January and that the firm may be illegally transshipping its “Made in China” products through Thailand into the United States, according to a press release issued by the committee. Doing so is in an effort “to evade U.S. customs duties, undermine American producers, and eliminate key American manufacturing jobs.”

According to Dayton Daily News, Homeland Security executed a search warrant at Harco Manufacturing in Moraine, Ohio on Jan. 18, 2024.

The CCP Committee posted the following on its website on Jan. 22:

“In September,  following testimony at the Select Committee on the CCP’s field hearing in Wisconsin, my colleague Darin Lahood and I uncovered a massive pattern of trade fraud by Chinese manufacturer Qingdao Sunsong, one designed to cripple American auto manufacturers.

“Roughly four months after we sounded the alarm on Susong’s operations, the Department of Homeland Security raided the company’s U.S. subsidiary headquarters.”

U.S. Senators Bill Cassidy (R-LA) and Sherrod Brown (D-OH) as well as Reps. Darin LaHood (R-IL), Glenn Ivey (D-MD), and Ashley Hinson (R-IA) are also part of the lawmakers’ newest inquiry.

“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,” the letters state. “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.

“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.”

The release provides a list of questions and requests the lawmakers are seeking responses to including:

• • “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.”

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