US House panel renews push to punish trade fraud by Chinese companies, warning of ‘catastrophic impact’ on manufacturing

US committee on China raises concerns about tariff evasion and lax enforcement days after raid of Chinese-owned car parts supplier in Ohio

Analysts say rules for determining origin of products are not always precise, making them easy to manipulate

3-MIN READ3-MIN

The US House Select Committee on the Chinese Communist Party says companies in China are evading import taxes and harming American manufacturers. Photo: Reuters

Published: 6:00pm, 25 Jan 2024

A US House of Representatives committee focused on China has made a renewed push for action against alleged trade fraud conducted by Chinese companies, days after federal agents raided a US subsidiary of a Chinese company.

But observers have said that the lack of precision in the rules determining fraud makes it hard to prove violations.

The US House Select Committee on the Chinese Communist Party said this week that tariff evasion by Chinese companies was having a “catastrophic impact” on American manufacturers and raised concerns that relevant fines and penalties were not being enforced.

They cited disclosures from Chinese automotive industry supplier Qingdao Sunsong, noting that the effect of outsourced processing in Thailand added between 4 to 8 per cent of the declared value of assembly between 2019 and 2021, which they argued was “far below” the “substantial transformation” threshold used to determine the origin of goods produced in multiple countries.

In September, the House committee wrote to Secretary of Homeland Security Alejandro Mayorkas, claiming that Qingdao Sunsong was evading US tariffs by transhipping their products through Thailand and having them enter the country under the guise of being Thai-made goods.