United States bipartisan lawmakers have introduced a bill that would revoke China’s Permanent Normal Trade Relations (PNTR), previously known as Most Favoured Nation (MFN) trade status, and impose a 100% tariff on a wide range of Chinese goods.
Republican John Moolenaar, chairman of the House Select Committee on the Chinese Communist Party, last November introduced the Restoring Trade Fairness Act, which, if enacted, would revoke China’s PNTR.
On January 23, he announced that the proposed Act has become a bipartisan bill as Democrat lawmaker Tom Suozzi will help promote it.
Moolenaar’s announcement came after newly-inaugurated US President Donald Trump signed an executive order on January 20 directing the Secretary of Commerce and the United States Trade Representative to assess legislative proposals regarding China’s PNTR.
On the campaign trail, Trump had vowed to slap a 60% tariff on all Chinese goods but he has hesitated to impose the sweeping tax since being inaugurated on January 20.
“The bipartisan consensus that both parties recognize the need to reset our economic relationship with China is a big win for our nation and the Select Committee,” Moolenaar said.
“Building on the tariff measures across three successive administrations, and in alignment with President Trump’s leadership through his new executive order, the Restoring Trade Fairness Act takes decisive action.”
According to the proposed Act, a wide range of Chinese products will face a 100% tariff. They include chemicals, drugs, nuclear reactors and parts, steam turbines and parts, agricultural and construction equipment, industrial robots, motors and engines, unmanned aircraft, consumer electronic products and weapons. Other products will face a 35% tariff.
If the Act is passed and enacted, tariff hikes will be fully implemented in five years. Two years after the enactment, 25% of the total duty increase shall apply. Four years after the enactment, 50% of the total duty increase shall apply.
Last November, some Chinese analysts said the impact of revoking China’s MFN status is equivalent to the imposition of a 60% tariff on all Chinese exports to the US.
Some Chinese commentators said China will be able to overcome these challenges by diversifying its exports to other countries. They said China can retaliate against the US by depreciating the Chinese currency, reducing purchases of American produce and restricting exports of niche metals to the US.
However, Tu Xinquan, dean of the China Institute for WTO Studies, University of International Business and Economics, says in a recent article that China should not underestimate the negative impact of losing MFN status.
“Revoking MFN status means that the US will no longer grant the same tariff treatment to China,” Tu says. “The US can then selectively raise tariffs for Chinese products.”
“Revoking China’s MFN status will also affect trade in services, intellectual property rights, bilateral investments, technology controls and personnel exchanges between China and the US,” he says. “The impact of losing the MFN status on China is much greater than tariff hikes.”
While it will take time for the US Congress to discuss the 100% tariff, Trump said on January 21 that he is considering imposing a 10% tariff on imports of all Chinese-made goods as soon as February 1. He justified the move on the accusation China is failing to stop its fentanyl precursors from entering North America.
The US president is also considering imposing a 25% tariff on Mexico and Canada at the beginning of February as he claims the two neighbors have not done enough to stop illegal immigrants and drugs from flowing into the US.
AmCham concerns
Meanwhile, a survey conducted by the American Chamber of Commerce (AmCham) in China showed that three out of 10 US companies in mainland China are considering or have already begun the process of relocating manufacturing or sourcing outside of the country due to rising geopolitical concerns.
The China Business Climate Survey, which has a total sample size of 368 member companies, was conducted from October 21 to November 15, 2024, spanning before and after the recent US presidential election on November 5.
The survey in late 2023 showed that only 23% of surveyed companies said they were considering or had already begun to leave China.
About 51% of the responding member companies said they believe that the bilateral US-China relationship may continue to deteriorate in 2025 while only 14% of the responding companies think that the relationship is expected to improve, according to the 2024 survey.
In the 2023 survey, only 24% of companies think the Sino-US relationship will deteriorate while 30% believe that the relationship will improve.
AmCham China said the top five challenges that US firms are facing in China are:
- rising tensions in US-China relations
- competition from state-owned and/or privately-owned Chinese companies
- regulatory compliance
- inconsistent regulatory interpretation and unclear laws and enforcement
- rising labor costs
“US-China relations remain the most consequential bilateral dynamic in the world today, and understanding the perspectives of our members has never been more important,” said Alvin Liu, chair of AmCham China. “A stable and constructive relationship, grounded in economic and trade ties, is critical not only for the prosperity of our two nations but also for global economic stability.”
AmCham’s surveys showed that about 48% of the responding companies ranked China among their top three global investment destinations in 2024, compared with 61% in 2020. Additionally, the proportion of companies that no longer listed China as a preferred investment destination rose to 21% last year from 10% in 2020.
In the technology and R&D sectors, 49% of AmCham members surveyed last year said foreign companies were treated unfairly compared to domestic companies. The figure was 42% in the 2023 survey.
In 2024, 46% of responding members said their China businesses were profitable while 18% said they lost money. In 2021, 59% of responding members said they were profitable while 13% saw a loss.
Commenting on American firms’ concerns about deteriorating US-China relations, Mao Ning, a spokesperson of the Chinese Foreign Ministry, said this actually reflects how important it is to pursue a steady, sound and sustainable China-US relationship.
“China always views and develops China-US ties in line with the three principles put forth by President Xi Jinping, namely mutual respect, peaceful coexistence and win-win cooperation,” Mao said. “We also hope the US will work with China and bring China-US relations back onto the track of sound and steady development.”
He Yadong, a spokesperson of the Chinese Ministry of Commerce, said the government will continue to provide a level playing field for foreign enterprises, reduce the negative list and enhance the business environment in 2025.
Yong Jian is a contributor to the Asia Times. He is a Chinese journalist who specializes in Chinese technology, economy and politics.
First: the CSC has no legislative jurisdiction. They can throw this PNTR bone out there, but whether the whole chamber will bite is a completely different story.
Second: It remains to be seen whether the Senate would fall on such PNTR measures.
Nice try. An obvious pick and choose con job.
Sooner or later. Old Donnie will use a military response, not tariffs.
We can’t wait, just one single DF51 , with 30 warheads that can target independently, will reach America within 15 minutes from launch. Have a nice day, America🤣🤣🤣🤣🤣
These are deep state players working against Trump’s grand plan. Wait and see who will win.