China Panel Investigates DHS Enforcement of Trade Fraud Penalties

A House China Panel Calls for Investigation into Chinese Trade Fraud

A House China panel has demanded an ​explanation from the Department of Homeland Security (DHS) on how ​it tackles trade fraud committed by Chinese⁤ companies to evade tariffs. The panel, led by Chair Mike Gallagher and member Rep. Darin LaHood, specifically pointed out Qingdao Sunsong, a ‌Chinese manufacturer of ‍automotive fluid transfer hoses and lines, as one of the culprits.

Gallagher and LaHood wrote a letter to⁣ DHS Secretary Alejandro Mayorkas, stating, “Reviews of Qingdao Sunsong’s public disclosures lay out a case of blatant trade fraud‍ that is having a ⁣catastrophic ​impact on American ⁣manufacturers.⁢ Indeed, ⁤one American company‌ has been compelled to accumulate significant debt, divest itself of two business divisions, and most recently lay off one-quarter of ⁤its workforce due to Sunsong’s trade fraud.”

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“If swift action‌ is not taken, ‍the affected​ company will be‌ forced to permanently cease‍ its operations,” warned the congressmen.

When Sunsong attempted to go public on the Beijing Stock Exchange (BSE) last year, the⁤ company openly discussed‍ its methods ​of evading U.S. tariffs on its exports.

According to a disclosure document (pdf) filed with BSE in October 2022, Sunsong revealed that its auto‍ parts manufactured in China had been subjected to a 25 percent tariff since 2018. To lower ​tariff costs, the company expanded its production in Thailand and has been ⁤exporting to the United States from ⁤there since 2021.

Furthermore, the filing indicates⁢ that⁤ the value-added by ⁤the Thailand step in the journey‍ of a⁣ Sunsong product from ⁤China to the United States is below 10 percent. This ​is significantly lower than the ‍minimum 35 percent required for a “substantial transformation” of products originally from China to be considered “made in Thailand” for ⁢tariff ⁢purposes.

The Epoch⁣ Times reached out to⁣ Qingdao Sunsong for comment.

The tariffs,⁢ commonly known as “Section 301 tariffs,” were initiated by the Trump administration using Section 301 of the Trade Act of ‍1974 to investigate and address unfair trade practices. The ⁢Biden administration has maintained these tariffs.

“We are concerned that this type of trade fraud is‌ widespread in today’s economic environment, with companies⁢ resorting to‍ such practices⁤ to effectively evade the United States’ ⁣tariff regime,” stated the lawmakers in their letter to DHS.

During an August hearing on China’s threat to American manufacturing, Mr. Gallagher ⁣emphasized, “China underprices and dumps, and that has had devastating consequences⁤ for manufacturing, American workers, and ⁤economic security. Tariffs, when strategically applied to China, reduce reliance on ‌China and promote domestic manufacturing.

“Targeted economic incentives⁤ for specific sectors can strengthen our economy and national‌ security,⁢ and countervailing duties can level the playing field.”

The Epoch Times has reached out to DHS for comment.

What are the potential consequences for American businesses and workers due to Sunsong’s trade fraud?

⁢D Malaysia, and falsely labeled the products as originating from‍ those countries. By doing so, Sunsong was able to avoid paying the higher tariffs ⁣imposed on Chinese imports.