Lawmakers Question Auto Parts Retailers on Chinese Supplier

By David Shepardson

WASHINGTON (Reuters) – A bipartisan group of lawmakers asked the CEOs of six major auto parts retailers if they have purchased products from a Chinese company that may have evaded U.S. tariffs, according to letters seen by Reuters on Friday.

Representative John Moolenaar, a Republican who chairs a House panel on China, along with the committee’s top Democrat Raja Krishnamoorthi and other lawmakers, inquired about AutoZone (NYSE:AZO), O’Reilly Auto Parts, Genuine Parts, Advance Auto Parts (NYSE:AAP), First Brands Group, and Factory Motor Parts concerning their possible purchases from China’s Qingdao Sunsong and its U.S.-based subsidiary.

The lawmakers, which included Senators Sherrod Brown (Democrat) and Bill Cassidy (Republican), expressed concerns that Qingdao may be illegally transshipping products through Thailand to evade U.S. customs duties.

The companies did not immediately respond to requests for comment or could not be reached.

“U.S. retailers are responsible for ensuring their procurement practices do not inadvertently support companies engaged in tariff evasion or other unlawful trade practices,” said the letters, which included questions about purchases and company efforts to comply with U.S. trade laws.

The letters, also signed by Representatives Darin LaHood, Glenn Ivey, and Ashley Hinson, referenced a report that U.S. officials raided Qingdao Sunsong’s U.S. subsidiary in January. Public disclosures indicate that U.S. auto part retailers including AutoZone, Advance Auto Parts, and O’Reilly represent over 40% of Qingdao Sunsong’s sales.

In 2019, the United States imposed new 25% tariffs on certain Chinese auto parts, including rubber hose assembly products manufactured by Qingdao Sunsong.

The lawmakers noted that the company established a transshipping facility in Thailand, citing a company filing that revealed the primary goal of their investments in Thailand was to circumvent U.S. tariffs and enable low-cost shipping of goods to U.S. auto part retailers.