Revoking China’s Trade Privileges: A New Era in US–China Relations

An aerial view shows cargo containers and gantry cranes at Yantian Port in Shenzhen, in southern China's Guangdong Province, on June 12, 2024. Jade Gao/AFP via Getty Images

Commentary

The U.S.-China Economic and Security Review Commission (USCC) has called on lawmakers to end permanent normal trade relations (PNTR) with China.

President-elect Donald Trump’s proposed anti-Chinese Communist Party (CCP) agenda gained significant momentum with the release of the USCC’s annual report, which provides a stark account of China’s violations of trade, human rights, and international norms. After extensive investigations, the congressional committee has recommended revoking China’s most favored nation (MFN) status, citing serious concerns over the CCP’s centralized control of the economy, distortion of global markets, and unfair practices that harm U.S. industries and workers.

MFN status grants countries like China the same trade benefits and privileges as key U.S. allies, such as the United Kingdom and Germany.

The report highlights how, under Xi Jinping’s leadership, China has transitioned from pursuing broad economic growth to a politically driven strategy that prioritizes “high-quality” production in emerging technologies. This approach is designed to establish dominance in high-tech sectors globally and is fueled by state-directed capital allocation, expanded manufacturing, and aggressive export practices—often at the expense of domestic industries in other countries. The committee argues that these practices represent a clear threat to fair competition and necessitate decisive action to protect U.S. economic interests.

China leverages excess capacity and adjusted lending under its Belt and Road Initiative to sustain growth and expand its global economic influence despite systemic weaknesses. Its trade practices—such as enlarging surpluses with developing nations and redirecting exports to bypass tariffs—undermine global competition, jeopardize U.S. manufacturing and technology sectors, and strain domestic markets. In response, some emerging economies have begun imposing tariffs to shield their industries from these exploitative tactics.

The USCC argues that revoking China’s MFN status is a critical step to safeguard American economic interests and security. Removing MFN would allow the United States to restrict the Chinese regime’s access to American markets, counter exploitative trade practices, and protect U.S. businesses and workers from economic coercion.

While the MFN principle is a cornerstone of the World Trade Organization (WTO) and ensures non-discriminatory trade practices among member nations, the United States retains sovereign authority to set its own trade policies. Under WTO rules, revoking MFN and imposing higher tariffs on China without a valid justification—such as the national security exception under Article XXI of the General Agreement on Tariffs and Trade (GATT)—could violate global trade agreements. However, the congressional committee asserts that revoking MFN is necessary to counter China’s unfair practices and empower the U.S. president and the trade representative to protect American economic interests.

This initiative aligns with Trump’s hawkish Cabinet selections and legislative priorities. Sen. Marco Rubio (R-Fla.), tapped for Secretary of State, co-authored the Neither Permanent Nor Normal Trade Relations Act in September to end PNTR with China. Similarly, Rep. John Moolenaar (R-Mich.), chairman of the House Select Committee on the CCP, introduced a bill advocating to cancel China’s permanent normal trade status.

Trump’s intention to appoint former U.S. Trade Representative Robert Lighthizer as his trade czar further signals a commitment to aggressive trade policies. Often called the architect of the U.S.–China trade war, Lighthizer is known for his hardline stance on China’s trade violations and his focus on protecting American economic sovereignty. Revoking MFN would remove constraints, allowing Lighthizer to confront the CCP’s economic practices with full force.

Some pundits speculate that a more intense U.S.–China trade war could hurt Republicans in the 2026 midterm elections, as the president might be blamed for rising consumer prices. However, the current landscape is markedly different from that of Trump’s first term. For one, a significant majority of Americans now hold unfavorable views of China, which could provide broader public support for tough trade policies. Furthermore, the gradual decoupling of the U.S. and Chinese economies over the past four years has reduced American supply chain dependence on China, softening the impact of accelerated decoupling.

The geopolitical climate has also shifted in favor of U.S. actions against China. The war in Ukraine has galvanized NATO, bringing Europe closer to the United States and making European allies more likely to align with American policies under Trump. This is especially true given Trump’s dissatisfaction with U.S. funding of Europe’s defense. He has proposed expanding U.S. energy exports to help Europe reduce reliance on Russian imports. Simultaneously, Trump has expressed that countries benefiting from U.S. trade or defense resources must not undermine American foreign policy—particularly when it comes to trade relations with China. This combination of public sentiment, economic adjustments, and geopolitical alignment provides a stronger foundation for pursuing a more aggressive trade stance with China.

If the United States revokes MFN status from China, Beijing will likely file complaints with the WTO to project itself as a rules-based actor and to apply diplomatic pressure on Washington. However, the WTO lacks enforcement mechanisms to compel the United States to reverse its actions. Even if a ruling favored China, the WTO’s authority would be limited to authorizing retaliatory tariffs or similar countermeasures—actions unlikely to significantly impact the United States, given current trade imbalances and geopolitical tensions.

A second Trump administration would likely amplify these dynamics. Trump has long criticized the WTO, accusing it of unfairly benefiting China and threatening to withdraw the United States from the organization. Under his leadership, the United States could invoke sovereignty to dismiss WTO rulings and focus on unilateral or bilateral trade policies. Trump might also use the national security exception, a broadly defined provision allowing countries to bypass WTO rules to protect their security, further complicating China’s ability to challenge U.S. actions. On some level, Trump may even view WTO opposition to his trade policies as an opportunity to justify withdrawing the United States from the organization entirely.

Given these stakes, the WTO is unlikely to escalate tensions with the United States, fearing the loss of one of its most influential members. The organization relies on voluntary compliance and international pressure to maintain its credibility, and a U.S. withdrawal would severely undermine its relevance. This would leave Trump free to impose trade restrictions on China, curbing funding for the CCP’s weapons programs and weakening the Chinese regime’s capacity to wage war against the United States or seize Taiwan.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.