You may recall when news broke of Chinese solar manufacturers evading U.S. tariffs a few months ago. It looks like it’s happening again, but this time, it’s the U.S. automotive aftermarket industry on the line.
This should come as no surprise. The Chinese Communist Party will stop at nothing to achieve economic domination in critical industries, including the automotive industry. The CCP’s Made in China 2025 plan makes its intentions clear. To achieve its goals, the CCP heavily subsidizes companies that operate in the key industries identified in its Made in China 2025 plan. These subsidies make it difficult for U.S. companies to compete. Add the fact that Chinese companies evade tariffs, and quickly domestic competitors will be forced to shut down.
According to evidence, one company — Qingdao Sunsong (also known as Sanxiang or Sunsong), bolstered by support from the Chinese government — is skirting tariff laws by trans-shipping Chinese products through Thailand to avoid paying U.S. tariffs. Sunsong is on a quest to gain dominance in the American automotive aftermarket industry, specifically in the manufacturing and selling of aftermarket parts such as brake hoses and power steering products.
In 2022, Sunsong’s application to the Beijing Stock Exchange exposed the company’s suspicious trans-shipping activities. During the review, the Exchange raised concerns about the company’s shipments through Thailand, leading to multiple inquiry letters and responses that were made public on the BSE’s website. Sunsong’s response inadvertently revealed the company’s involvement in deceitful practices.
This revelation highlights the disparity in behavior between how Chinese companies report to domestic authorities versus foreign authorities. They remain truthful and compliant with the Chinese government due to swift and severe consequences for lying within China. However, they resort to deception when faced with American regulations, leveraging the relatively lax enforcement by the United States.
The well-known documentary “The China Hustle” explores this dual-reporting phenomenon and underscores the urgent need for heightened scrutiny, stronger regulations and robust protection of American businesses. Addressing these deceptive practices is crucial to safeguarding the integrity of international trade and ensuring fair competition on a level playing field.
Well-known American companies such as O’Reilly, Advance Auto Parts and AutoZone buy from Sunsong’s U.S.-based subsidiary. At the same time, American-based manufacturers and suppliers face a dual threat from tariff evasion and the pricing distortions caused by Chinese government subsidies.
Tariff integrity — respecting our trade laws — is a crucial component of American businesses’ ability to compete internationally. Tariffs are an essential tool used by the United States to combat international price distortions resulting from foreign governments’ tactics, like massive subsidization and domestic trade protection, and to protect our key industries.
We can’t put our faith in foreign governments to ensure that companies operating under their purview follow the spirit of the sanctions and regulations we have put in place. Our government must take that responsibility. The long-term survival of the U.S. automotive industry relies on government leaders to act swiftly and protect American businesses from companies that skirt or break the law.
Where tariffs are put in place, they should be respected or repealed — but not flouted. The American rule of law must mean something. We must have tariff integrity.
