Peoria Standard

Washington, D.C. - Congressman Darin LaHood (R-IL) and Chairman Mike Gallagher (R-WI) of the House Select Committee on the Chinese Communist Party are urging Secretary of Homeland Security Alejandro Mayorkas to take immediate action against Qingdao Sunsong, a Chinese auto component manufacturer engaged in blatant trade fraud and tariff evasion that is severely impacting American manufacturers. The lawmakers are concerned that Sunsong's trade fraud has already led to significant layoffs and could potentially force a company to permanently shut down.

"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. If swift action is not taken, the affected company will be forced to permanently cease its operations," said Congressman LaHood and Chairman Gallagher.

After conducting a brief review of Qingdao Sunsong’s public disclosures and the controlling shareholder's on-the-record comments, Congressman LaHood and Chairman Gallagher have determined that the company has a clear pattern of trade fraud that requires immediate review and enforcement from Secretary Mayorkas.

Qingdao Sunsong is accused of evading Section 301 tariffs by transshipping their products through Thailand with limited transformation before importing them into the United States. This practice allows the company to avoid the tariffs imposed by the United States on products made in China. By falsely labeling their products as made in a country other than China, Qingdao Sunsong is able to bypass the tariffs and gain an unfair advantage in the market.

The lawmakers argue that this type of transshipment to evade tariffs is a serious violation of U.S. law and undermines the country's economic and national security. They are concerned that fines and penalties for importers who knowingly falsify the country of origin label on their imports are not being enforced.

In June 2022, Qingdao Sunsong applied to publicly list on the Beijing Stock Exchange and was required to provide detailed information about its international operations, including its operations in Thailand and North America. In their response to the stock exchange, Qingdao Sunsong confirmed that they shifted production from China to Thailand in order to reduce tariff costs. This confirmed their intention to evade the Section 301 tariffs imposed by the United States.

Furthermore, Qingdao Sunsong's financial disclosures revealed a pattern of fraud. The company claimed that the outsourced processing in Thailand added only a small percentage to the value of their products, far below the threshold required for "substantial transformation." They also disclosed the use of a new subsidiary, Sunsong Thailand, to continue this practice.

The controlling shareholder of Qingdao Sunsong, Wei Zengxiang, made a statement in the company's 2022 prospectus indicating his awareness of the trade fraud. He pledged to personally pay any penalties or legal liabilities imposed on the company for violating trade regulations and evading tariffs.

Congressman LaHood and Chairman Gallagher are concerned that this type of trade fraud is widespread and undermining the United States' tariff regime. They have requested a briefing from Secretary Mayorkas on how the Department of Homeland Security is investigating and seeking redress from these perpetrators.

The House Select Committee on the Chinese Communist Party has the authority to investigate and submit policy recommendations on the economic, technological, and security progress of the Chinese Communist Party and its competition with the United States.

For more information and to view a copy of the letter sent to Secretary Mayorkas, click HERE.