A bipartisan group of U.S. lawmakers is demanding answers from major auto parts retailers regarding their procurement practices and potential links to illegal trade activities. Led by Chairman John Moolenaar and Ranking Member Raja Krishnamoorthi of the House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party, the inquiry targets industry giants such as AutoZone, O’Reilly Auto Parts, Genuine Parts Company, Advance Auto Parts, First Brands Group, and Factory Motor Parts. Concerns center around these companies’ dealings with Qingdao Sunsong, a Chinese manufacturer, and its U.S. subsidiary, which is currently under federal investigation for alleged tariff evasion.
Scrutiny on Supply Chains and疑いのある Practices
The investigation was spurred by public reports highlighting a federal raid on Qingdao Sunsong’s U.S. facilities in January. The core suspicion is that Qingdao Sunsong may be illegally transshipping products from China through Thailand to bypass U.S. customs duties imposed on goods originating from China. This practice, known as transshipment, is a serious violation of trade laws, designed to protect domestic industries and jobs. Lawmakers are concerned that by purchasing from Qingdao Sunsong, these major retailers may be inadvertently or knowingly supporting these unlawful activities, undermining American manufacturers and fair trade practices.
The bipartisan letter explicitly states, “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.” This significant reliance on Qingdao Sunsong products raises questions about the retailers’ due diligence processes in ensuring ethical and legal sourcing. The lawmakers emphasize the responsibility of U.S. retailers to guarantee their procurement practices do not inadvertently aid companies engaged in tariff evasion or other illegal trade practices that harm American businesses and contradict U.S. policy objectives.
Key Questions for Auto Retail Giants
To thoroughly investigate these concerns, the lawmakers have posed a series of critical questions to the auto parts retailers. These questions aim to uncover the extent of their relationship with Qingdao Sunsong and the measures taken to verify the legality of their supply chain. Key inquiries include:
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Pre-Tariff Purchases and Origin Verification: Lawmakers are asking if these companies purchased from Qingdao Sunsong before May 10, 2019, when the U.S. imposed a 25% tariff on automotive parts from China. Crucially, they want to know how the retailers verified Qingdao Sunsong’s claim of shifting its Country of Origin (COO) from China to Thailand after these tariffs were implemented. Did retailers simply accept the claim, or did they conduct independent verification to ensure parts like brakes or hoses were genuinely manufactured in Thailand?
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Purchase Patterns and Awareness of Investigation: The inquiry delves into whether the retailers increased purchases from Qingdao Sunsong after the 2019 tariffs, following a congressional warning in September 2023 about potential illegal transshipment, and after the DHS raid in January 2024. Lawmakers seek a detailed account of procurement from Qingdao Sunsong since May 2019 and future purchasing plans. This line of questioning aims to understand if retailers were aware of the growing concerns and investigation surrounding Qingdao Sunsong and if it impacted their purchasing decisions for parts like lights or mirrors.
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Due Diligence and Compliance Procedures: A central focus is on the retailers’ due diligence processes. Lawmakers are asking how these companies ensure their suppliers comply with U.S. trade laws. They are requesting data on the percentage of products purchased from China in 2019 and 2023 and the shift in COO sourcing after the 2019 tariffs. This aims to assess the effectiveness of their supply chain oversight for various panels and seals.
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Forced Labor Prevention: The letter also probes the companies’ efforts to prevent the procurement of goods produced with forced labor, particularly concerning the Uyghur Forced Labor Prevention Act. This highlights the broader ethical and legal responsibilities of these companies beyond just tariff evasion, extending to human rights and labor practices in their supply chains for components like belts and valves.
Potential Repercussions and Industry-Wide Impact
The consequences for companies found to be complicit in purchasing illegally transshipped products can be severe. U.S. law outlines both criminal and civil penalties, including substantial fines under 19 U.S.C. § 1592. Beyond legal repercussions, such findings can severely damage a company’s reputation and erode consumer trust.
This investigation has significant implications for the entire auto parts industry. It underscores the critical need for rigorous supply chain due diligence, transparent sourcing practices, and a commitment to complying with U.S. trade laws. As the investigation unfolds, the responses from these major retailers will be closely watched by industry stakeholders, policymakers, and consumers alike. The outcome could reshape procurement strategies and compliance standards within the automotive aftermarket and beyond.
