America’s manufacturers, its workers and its communities are fighting for their survival and China represents the single biggest threat. It’s not because Chinese innovation is superior, or that their product is better or that their workers work harder. It’s because many Chinese companies steal American intellectual property, receive massive state subsidies, and often cheat U.S. trade laws intended to counter these unfair advantages. We heard these stories told time and again last year, most notably in the solar panel industry.
On Jan. 18, another case of China breaking our rules came to a head when the Department of Homeland Security executed a raid on Qingdao Sunsong, a Chinese-based car parts manufacturer with operations in Ohio.
In Aug. 2023, Republican Illinois Rep. Darin LaHood, a member of the House Select Committee on the Chinese Communist Party (CCP), blasted Sunsong for “its blatant effort to evade 301 tariffs” and called on the federal government “to do a better job to support small and medium-sized manufacturers by pushing back against Chinese companies like Sunsong.” LaHood and Wisconsin Rep. Mike Gallagher, the committee’s chairman, issued an open letter to Homeland Security Secretary Alejandro Mayorkas requesting that action be taken against Sunsong, declaring that “[r]eviews of Qingdao Sunsong’s public disclosures lay out a case of blatant trade fraud that is having a catastrophic impact on American manufacturers.”
The case against Sunsong represents another instance of a Chinese company apparently dodging tariffs. The real fallout of Sunsong’s actions and the likely existence of hundreds of similar cases, however, is the forced closure of American factories and the elimination of well-paying, blue-collar jobs nationwide.
Decades of CCP support in the form of cheap loans, subsidies, and import protection give these Chinese competitors an unbeatable advantage against industrious Americans companies. The Center for Strategic International Studies (CSIS) reports that in 2019 alone, the CCP spent $248 billion on industrial subsidies, demonstrating the urgent need for a level playing field.
The United States has tools to curb Chinese economic aggression. Section 301 tariffs, also known as the “Trump tariffs,” apply a 25 percent tariff to many imported Chinese goods, including automotive parts. When enacted, these tariffs were viewed as one of the toughest measures yet to push back against China and protect American industry. In the case of Sunsong, charges of trade fraud could result in civil penalty fines in the tens of millions of dollars as well as a criminal penalty of up to 20 years in prison for those complicit.
The lack of effective detection and enforcement of tariff fraud perpetuates an uneven playing field and erodes U.S. industry. The Select Committee issued an end-of-year report advocating for changes to policy and additional resources that would enhance government’s ability to detect and enforce trade law. Among its many recommendations is the support of the Level the Playing Field Act 2.0, the 21st Century Customs Framework, and increased resources to fund the activities of the DOJ-led Trade Fraud Task Force.
The federal investigation into Sunsong is ongoing and, if the China Committee is right, U.S. government authorities will hold Sunsong accountable. But this situation raises an uncomfortable question: who enables Sunsong’s business operations on American soil?
We must acknowledge the broader and unfortunate truth that some U.S. businesses play nice with CCP-backed companies that break the law. In the microcosm of Sunsong, public disclosures reveal that major U.S. companies like O’Reilly Auto Parts and AutoZone make up two of Sunsong’s five largest global customers, A review of their websites indicates that they continue to do business with them today. As Americans, we must ask ourselves: Is the tradeoff of doing business with a company under investigation for breaking U.S. trade laws worth a better deal — a deal financed by the CCP?
In cases like this, it becomes clear that corporate motivations can conflict with the objectives of U.S. trade law. It’s crucial for large U.S. firms to uphold standards that reflect the intended purpose of these laws rather than chasing immediate financial benefits. Lawmakers should consider holding U.S. companies jointly accountable by broadening the scope of legal liability to include American companies that buy products from importers who dodge tariffs. The problem of trade fraud goes beyond just following laws and ethics; it’s also about safeguarding our national interests against ongoing exploitation by the CCP.
Since China isn’t going to miraculously stop these practices and start playing by the rules, the U.S. must vigorously fight back against any underhanded dealings. The China Committee is doing important work. But this is a battle that calls for more than just government action.
Large U.S. corporations must not only comply with the law but also take pride in doing so, rigorously vetting their supply chains to make sure they are free of nefarious CCP ties. Our collective mindset must evolve; conscientious choices are the bedrock of our nation’s future. As Gallagher remarked, “The decline of American industry is not inevitable… it is a choice.” For the sake of our manufacturers, workers, and communities, let’s make sure we make the right choice.
Dan Harris is a founding member of Harris Sliwoski, an international boutique law firm that focuses on representing American and European companies overseas, and foreign companies in the United States. He is also the co-author of the award-winning China Law Blog (www.chinalawblog.com). Dan received his B.A. from Grinnell College and his J.D. magna cum laude from Indiana University School of Law.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller.