Moolenaar, Krishnamoorthi Call for Enforcement Action on Unlawful PRC Trade Practices

Washington D.C. Mar 6 – Today, Chairman John Moolenaar (R-MI) and Ranking Member Raja Krishnamoorthi (D-IL) of the Select Committee on the Chinese Communist Party, sent a letter to Attorney General Pam Bondi, Secretary of Homeland Security Kristi Noem, and U.S. Trade Representative Jamieson Greer calling for them to take additional action against unlawful PRC trade practices. The letter urges the three officials to investigate and take appropriate enforcement actions against companies that bypass U.S. trade laws by unlawfully shipping products through third countries. It highlights the serious harm these practices have inflicted on many U.S. industries, including automotive parts, textiles, apparel support, as well as the PRC’s trafficking of precursor chemicals used to produce fentanyl.

In the letter, the Chairman and Ranking Member write:

“The PRC’s systematic abuse of U.S. trade laws and protective mechanisms through transshipment, forced labor, and other illicit trade practices represents a clear and urgent threat to American industry and workers. The Select Committee’s bipartisan investigative and oversight work has exposed many examples of relevant concerns. Given such evidence of systemic fraud, we urge your agencies to strengthen enforcement against the PRC’s unlawful trade practices, including by criminally prosecuting trade criminals, stepping up civil enforcement, and self-initiating a Section 301 investigation into PRC transshipment schemes.”

The full letter is available here and copied below.

Dear Attorney General Bondi, Secretary Noem, and Ambassador Greer,

We write today to request additional actions by your agencies to enforce U.S. trade laws and address the People’s Republic of China’s (PRC) unlawful practices that restrict U.S. commerce. The Select Committee on the Strategic Competition between the United States and the Chinese Communist Party (CCP) has uncovered numerous instances of PRC-based actors violating U.S. trade laws—including by unlawfully transshipping products through third countries into the United States—to circumvent tariffs and duties, evade customs enforcement, or obfuscate the origin of products produced in whole or in part with forced labor. Failure to take swift action to hold the PRC accountable for these unlawful practices will result in these actors continuing to inflict severe harm on American industries and workers. We urge your respective agencies to increase their enforcement to curb transshipment. Specifically, we request that the Office of the United States Trade Representative (USTR) launch an investigation of these practices under Section 301(b) of the Trade Act of 1974.

The use of transshipment to evade U.S. tariffs is a serious violation of U.S. law and undermines American economic and national security. To evade Section 301, 232, and 201 tariffs and duties, many PRC companies ship their Made in China products to countries that do not face tariffs at the same level as those the United States imposes on the PRC. Without fundamentally transforming the product, these companies then ship their Made in China products to the United States under the guise of being made in a country other than the PRC. An entire industry of PRC logistics companies has emerged since the imposition of Section 232 and 301 tariffs on the PRC in 2018, with logistics brokers openly advertising that they can “break […] the barriers of international trade and antidumping to let Chinese products enter international markets successfully” and that “transshipment is the only way to avoid high tariffs and import limits.” These companies boast of tariff evasion by sending steel, aluminum products, clothing, and stainless steel sinks, among other goods, through third countries to the United States, and Europe, including by obtaining false certificates of origin in third countries for goods made in the PRC.

As you know, these shipments are only permitted when a product has undergone substantial transformation in a third country—which is defined by the International Trade Administration as a “fundamental change in form, appearance, nature, or character” resulting from processing or manufacturing that significantly increases its value compared to its original value when exported from the country of origin. Importers that knowingly falsify the country of origin label on their imports are subject to significant fines and penalties under 19 U.S.C. § 1592. Companies or individuals found complicit in knowingly selling or purchasing unlawfully transshipped products also face serious criminal liability under Title 18.

In recent years, Homeland Security Investigations (HSI), including through its Global Trade and Investigations division, has investigated a variety of unlawful transshipment networks that facilitate the evasion of U.S. tariffs and trade laws. These investigations have identified multiple cases of PRC goods being rerouted through third countries to circumvent anti-dumping and countervailing duties (AD/CVD), particularly in aluminum, solar panels, and textiles.

In one case, the U.S. government pursued legal action in 2024 against a company that illicitly transshipped Chinese aluminum through third countries, seeking over $11 million in unpaid import duties and up to $62 million in civil penalties. Similarly, HSI in coordination with the Department of Commerce exposed PRC solar manufacturers unlawfully routing their products through Cambodia, Thailand, and Vietnam to evade U.S. tariffs. HSI has also uncovered PRC textile transshipment schemes in which countries falsely label the country of origin of textile products when importing through free trade agreement countries.

Although law enforcement has been actively tracking and exposing these transshipment schemes, current enforcement efforts remain insufficient to hold perpetrators accountable and deter future violations of U.S. trade laws. Stronger trade enforcement measures, including through criminally prosecuting trade criminals, stepping up civil enforcements, and initiating a Section 301 investigation into PRC transshipment schemes, are necessary to protect American industries and workers from these illicit and damaging practices.

In the 118th Congress, the Select Committee uncovered numerous cases of blatant trade fraud that undermine American manufacturers and force American consumers into unwitting complicity in the CCP’s ongoing genocide of the Uyghurs and other ethnic and religious minority groups in Xinjiang. The PRC’s transshipment practices give its companies an unfair advantage, allowing them to flood the U.S. market with artificially cheap goods while bypassing trade enforcement mechanisms. The consequences for American companies are severe—they are frequently burdened with significant debt, forced to lay off workforce, and pressured to shift production overseas.

To address these challenges, the Select Committee has undertaken extensive bipartisan investigative work to expose many cases of these fraudulent trade practices and push for stronger enforcement measures. Today, we are reintroducing the Protecting American Industries and Labor from International Trade Crimes Act, which establishes a new unit at the Department of Justice to criminally prosecute trade violations and passed the House unanimously in the 118th Congress. Below, we highlight some of the key areas we have explored to inform your future enforcement actions.