GOP Senators Introduce Legislation to Strip China’s Favored Trade Status

Sen. Tom Cotton (R-Ark.) on Capitol Hill in Washington, on March 25, 2021. Andrew Harnik/Pool/Getty Images

Three Republican senators have introduced new legislation that would strip China of its trade privileges with the United States and increase tariffs by 100 percent on certain Chinese imports.

Sen. Tom Cotton (R-Ark.), who sits on the intelligence and armed services committee, said the legislation would remove China’s permanent normal trade relations (PNTR) status. The legislation, called the Neither Permanent Nor Normal Trade Relations Act (S.5264), was co-sponsored by Sens. Marco Rubio (R-Fla.) and Josh Hawley (R-Mo.).

“China’s Permanent Normal Trade Relations status has enriched the Chinese Communist Party while costing the United States millions of jobs,” Cotton said in a statement released by his office on Sept. 26.

“This comprehensive repeal of China’s PNTR status and reform of the U.S.–China trade relationship will protect American workers, enhance our national security, and end the Chinese Communists’ leverage over our economy.”

If the legislation is enacted, the tariffs on Chinese goods deemed important to U.S. national security would double over a five-year period. The president would be authorized to create further quotas and tariffs to phase out Chinese imports and to institute bans on specific Chinese goods.

The bill would end “de minimis” treatment for China, the trade provision that allows shipments with a value of less than $800 to enter the United States with minimal scrutiny.

The revenue generated from the tariffs would go toward farmers and manufacturers harmed by potential Chinese retaliation, the purchase of key munitions to potential conflicts in the Pacific, and paying down the debt.

In 2000, Congress passed legislation to give China permanent most-favored-nation status (MFN), now known as PNTR. This status paved the way for China’s accession to the World Trade Organization (WTO) and opened the U.S. market to Chinese products, providing trade advantages such as reduced tariffs.

“Giving Communist China the same trade benefits that we give to our greatest allies was one of the most catastrophic decisions that our country has ever made,” Rubio said in a statement. “Our country’s trade deficit with China more than quadrupled, and we exported millions of American jobs. Ending normal trade relations with China is a no-brainer.”

The Coalition for a Prosperous America (CPA), a nonprofit business advocacy organization, issued a statement commending the three senators for advancing the legislation.

“For more than two decades, China’s PNTR status has fueled its skyrocketing overcapacity in its state-subsidized industries, allowing Beijing to exploit U.S. markets and erode America’s industrial base,” said Michael Stumo, CEO of the organization.

“We must learn from the past. There can be no second China Shock here in America. Ending PNTR is crucial to protect U.S. industries from a new wave of China Shock 2.0, which risks displacing even more American investment and jobs than the original China Shock.”

CPA estimated that the first “China shock“, a surge of Chinese imports following China’s accession to the WTO, has cost the U.S. 3.4 million manufacturing jobs since 2001.

In September last year, CPA published an analysis showing that U.S. real gross domestic product could grow by 1.75 percent after revoking China’s MFN status, and that 2 million new American jobs could be created.

Biden administration officials have recently made comments about “China shock.”

On Sept. 23, top White House economic adviser Lael Brainard discussed the need to protect the U.S. auto sector at the Detroit Economic Club.

“China is flooding global markets with a wave of auto exports at a time when they are experiencing overcapacity. We have seen this playbook before in the China shock of the early 2000s that harmed our manufacturing communities,” Brainard said in planned remarks. “The administration is determined to avoid a second China shock.”