Rescind China’s Permanent Normal Trade Relations Status

Estimated Revenue:
$300–500 billion

2025–2034. American Compass’s “Disfavored Nation” provides details on what a proposal along these lines might look like and estimates it could raise about $50 billion annually. Calculations based on Congressional Budget Office modeling suggest a comparable revenue effect.

Summary

At the turn of the 21st century, Congress granted China Permanent Normal Trade Relations (PNTR) status. This designation, previously subject to annual renewal, provided permanent access to the U.S. market and enabled China’s ascension to the World Trade Organization (WTO). It also imposed tariff rates on goods from China at the favorable levels prescribed in Column 1 of the U.S. Harmonized Tariff Schedule (HTS). Rescinding China’s PNTR status and establishing a new HTS column imposing high tariffs on its imports would generate substantial revenue, drive supply chains out of China, and restore the principle of reciprocity in U.S. trading relationships.

The Case for Rescinding PNTR

Underpinning the decision to give China PNTR status was a false belief that China would open its economy, embrace democracy, and abide by the market principles it committed to when it signed the WTO agreements. There would be a peace dividend: a less aggressive China and a more stable world. Policymakers also promised welcoming China into the global trading system would be a win-win for workers and producers in the United States. None of that was true.

Instead, granting PNTR status to China gave manufacturers certainty to offshore production, leading to stagnant industrial production and a rapid decline in U.S. manufacturing employment. China exploited its access to the U.S. market while aggressively protecting its own, using industrial policy to systematically attract industries vital to economic growth and national security. This policy error, among the most foolish ever made by a great power, has eroded our industrial base, led to chronic bilateral trade deficits, and transferred wealth to our greatest adversary, which it has used to finance its military expansion.

Policymakers have signaled interest in changing course. The bipartisan House Select Committee on the Chinese Communist Party has recommended rescinding PNTR with China, as has the U.S.-China Economic and Security Review Commission. In January 2025, lawmakers introduced bipartisan, bicameral legislation that would revoke China’s PNTR status, construct a new HTS column specific to China, and impose tariff rates of 100% on strategic goods. President Trump has also signaled an interest in doing so, including the recommendation in the 2024 Republican Party’s platform and instructing agencies to review the issue as part of his Day One memorandum on an America First Trade Policy.

Congress should rescind China’s PNTR status, increase base tariff rates on goods from China, and implement prohibitive tariff rates on strategic goods.