Is Biden's Commerce Department unknowingly taxing US companies for China's benefit?

Jul 22, 2023

Give President Joe Biden some credit for his recent executive order to curb investments with China for the protection of national security. But he probably should go further to protect U.S. interests.

The Chinese, governed by engineers, have used big strategic plans to become a comprehensive superpower. The Belt and Road Initiative has gained significant attention as China attempts to build the infrastructure for trade with all of Europe and Asia.

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Its "Made in China 2025" plan seeks to ensure China makes what China needs by eliminating the need to acquire any technology or materials needed for its products. It wants no vulnerabilities.

To this end, China uses a variety of techniques to undermine, infiltrate, and redirect U.S.-based companies, including financing and acquisition of U.S.-based facilities. These transactions usually involve a series of foreign companies and shell corporations to obscure the Chinese strategic ambitions. As we uncover these plans, we’re learning that U.S. policy may be helping China achieve these anti-free market, anti-transparency goals.

For example, the Department of Commerce is investigating how U.S. flexible packaging manufacturers, who make the containers that package our foods and protect our surgical instruments, source their aluminum foil from South Korea and Thailand. Even though the investigation has not concluded, the Department of Commerce is already forcing the U.S. manufacturers to pay tariffs they may not end up owing, depending on the outcome of the investigation. Companies have had to stall critical research and development efforts, fire employees, and even shut down their companies to pay bills they may not even owe.

With those firms disadvantaged by suddenly higher costs, other businesses have benefited. One such business is the Granges Corporation in Franklin, Tennessee, the only producer of this packaging in the United States. So Biden’s actions have brought business home from Thailand and South Korea to Tennessee, which would seem to be a good thing.

Only this too might end up helping China’s strategic plan. Granges is based in Sweden and has traded on the Swedish stock exchange since 2014. It acquired its U.S. facilities in 2016.

Also, it changed its name to Granges in 2013 as part of a rebrand. Before that, it was known as Sapa, and as Sapa, it made a $100 million investment with the Chinese government and its government-owned Aluminum Corporation of China to build a plant in Jiulongpo District, China. And in 2011, Sapa/Granges’s parent company sold $2 billion in assets to a Chinese government-owned company China National Bluestar Corp., whose CEO indicated the proceeds would be used to invest in its “aluminum solutions unit Sapa.”

Also in 2011, Sapa/Granges purchased an aluminum factory in Jiangyn, China, and Sapa Asia President and future Granges CEO and President Johan Menckel said of the new China facility: “[W]e are also planning to re-locate one of our large presses from North America to this location.” A Chinese story ran after this purchase with a photo of the Sapa Asia president/Granges CEO titled, “Sapa is Shaping the Future of the Chinese Aluminum Industry.”

So, yes, these aluminum products are being made in our country. But it appears the company making it — the only company — has more ties to China than to the U.S. in this strategically significant business. This issue touches on national security.

The Department of Commerce should determine what tariffs the government is owed, but it also must determine if that investigation, and the money paid before the verdict, is itself benefiting the Chinese Communist Party over us. The last thing we need is to hurt our companies in the process of helping China increase its hold on a key product.

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Brian McNicoll is a freelance writer based in Alexandria, Virginia, a former senior writer for the Heritage Foundation, and former director of communications for the House Committee on Oversight and Government Reform.