On Thursday, November 14, John Moolenaar, chairman of the House China Task Force, introduced the “Restoring Trade Fairness Act” in the U.S. House of Representatives, aimed at revoking Permanent Normal Trade Relations (PNTR) with China.
According to a news release on the committee’s official website, “In 2000, when China was preparing to join the World Trade Organization, the U.S. Congress voted to extend China’s PNTR status, hoping that the Chinese Communist Party (CCP) would liberalize and adopt fair trade practices. Granting Permanent Normal Trade Relations status to China meant that its state-owned economy received preferential tariff treatment under U.S. law, opening the floodgates for products manufactured by a communist state to enter. This gamble by the U.S. has resulted in a tragic loss. Over the past two decades, the U.S. manufacturing sector has been depleted, American companies’ intellectual property has been threatened and plundered by the CCP, and the CCP has emerged as the top competitor to the United States.”
Earlier this year, Republican Senators Tom Cotton, Marco Rubio, and Josh Hawley also introduced similar legislation in the Senate.
Chairman Moolenaar, upon introducing the bill, stated, “Today, I have proposed the ‘Restoring Trade Fairness Act’ to prevent China from exploiting the U.S. and to provide a fair competitive environment for American workers and our allies. Maintaining Permanent Normal Trade Relations with China has been a disappointment for our country. It has eroded our manufacturing base and sent job opportunities to our top adversary. Meanwhile, China has betrayed the expectations of freedom and fair competition it made over two decades ago when obtaining Permanent Normal Trade Relations.
“Last year, our bipartisan committee overwhelmingly agreed that the U.S. must reset its economic relationship with China. Today, building on the tariffs imposed by the Trump and Biden administrations, the ‘Restoring Trade Fairness Act’ will revoke China’s Permanent Normal Trade Relations with the U.S., safeguard our national security, support the resilience of supply chains, and bring manufacturing jobs back to the U.S. and our allies. This policy creates a fair competitive environment and helps the American people win in strategic competition with China.”
In response, Senator Cotton said, “China’s Permanent Normal Trade Relations status has enriched the CCP while costing America millions of job opportunities. Terminating China’s PNTR status and reforming U.S.-China trade relations will protect American workers, strengthen our national security, and end the leverage the CCP has on our economy.”
The bill will terminate Permanent Normal Trade Relations with China, eliminating the need for an annual vote for re-certification by Congress. The bill will integrate tariffs into legislation and establish a new tariff category for China.
Under the new tariff category, non-strategic goods will face a minimum 35% ad valorem duty (based on the estimated value of goods or transactions) while all strategic goods will have a minimum 100% ad valorem duty.
The new tariff rates will be phased in over five years, with a 10% tariff increase in the first year, 25% increase in the second year, 50% increase in the fourth year, and a 100% increase in the fifth year.
Strategic items will be listed in the bill according to the HS code. These items are based on the Biden administration’s “Advanced Technology Product List” and China’s “Made in China 2025” plan.
The bill will terminate the Most Favored Nation status for all covered countries (including China) and require Customs handling on other Most Favored Nation goods.
The bill will provide tariff revenue to American farmers and manufacturers that may be harmed by possible Chinese retaliation. The additional revenue will be used to acquire essential military supplies to counter Chinese aggression in the Pacific.
To combat Chinese export, President Trump imposed tariffs on billions of dollars worth of Chinese goods in 2018. President Biden has continued these tariffs and expanded them to include electric vehicles from China. This bipartisan cross-government consensus has effectively nullified China’s Permanent Normal Trade Relations status. Therefore, in 2023, the House China Task Force nearly unanimously passed legislation to revoke China’s Permanent Normal Trade Relations status in the regulations. The “Restoring Trade Fairness Act” achieves this bipartisan goal and integrates a series of tariffs into law to combat CCP’s state-sponsored economic aggression.
The bill provides a clear structure and strategy for U.S. businesses to counter companies aligned with China and guarantees protection against potential Chinese retaliation, correcting the mistake of granting China privileged access to the U.S. market.
A recent report by the U.S. International Trade Commission confirmed that tariffs imposed on Chinese products under Section 301 of U.S. trade law have not had a significant impact on inflation. Instead, these tariffs have encouraged supply chain diversification, reducing U.S. reliance on Chinese imports in critical sectors such as electronics, automotive parts, and apparel.
For every 1% increase in tariffs, Chinese imports decreased by about 2% as American importers diversified their manufacturing sources. The report emphasized that tariffs reduced dependence on China but did not lead to significant increases in prices for American consumer goods.
Oren Cass, founder and chief economist of American Compass, pointed out, “The trade relationship between the U.S. and China is far from ‘normal.’ For nearly 25 years, the U.S. government has pursued increased engagement with China in pursuit of a false ideal of an open and democratic China. Instead, the CCP has maintained its nationalist mercantilist economy, while the U.S. has lost thousands of factories, millions of jobs, hundreds of billions of dollars in assets, and increasing amounts of innovation.
“Chairman Moolenaar’s bill terminates the ‘normal’ trade relationship with China, recognizing the severity and urgency of the situation. It will set America on a path to restoring balance, ending reliance on China, and rebuilding a more resilient economy.”
Michael Stumo, CEO of the Coalition for a Prosperous America, stated, “Granting China Most Favored Nation status has been a serious mistake with long-term consequences for American workers, industry, and economic security. China has used this status to bolster its military buildup, erode U.S. industrial capabilities, and fund other adversaries including Russia and North Korea.
“Strengthening domestic industrial capacity in the U.S. is crucial for economic growth, creating high-paying jobs, and safeguarding the nation’s future. Every sector of domestic production, be it manufacturing, agriculture, or energy, plays a critical role in enhancing U.S. economic resilience and national security. Congress’ focus on revoking China’s Most Favored Nation status is essential to ensuring American prosperity and independence.”