U.S. Senate Bill Would End China PNTR As Companies Look To Reshore Anyway

Last week, Rep. John Moolenaar (R-Mich.), who chairs the House Select Committee on the Chinese Communist Party (CCP), introduced a bill that would end China’s Permanent Normal Trade Relations (PNTR), a policy that has been in place for more than two decades.

Under the legislation, there would be no annual congressional vote for recertification of PNTR. The bill is not likely to be considered before the current session of Congress adjourns, however, though it is likely to be re-introduced once the new session of Congress is seated in January 2025.

In addition to ending PNTR, the bill would codify tariffs in statute and create a new tariff column for China that would add a minimum 35 percent ad valorem tariff for non-strategic goods and a minimum 100 percent ad valorem tariff for all strategic goods. The new tariff column rates would be phased-in over five years with 10 percent of the tariff increase implemented in year one, 25 percent of the increase implemented in year two, 50 percent of the increase implemented in year four, and 100 percent of the increase implemented in year five.

The bill also would:

• End de minimis treatment for covered nations, including China, and require customs brokers for other de minimis shipments;
• Provide tariff revenue to U.S. farmers and manufacturers injured by possible Chinese retaliation; and
• Use revenue to purchase munitions vital to deterring CCP aggression in the Pacific.

“Having permanent normal trade relations with China has failed our country, eroded our manufacturing base, and sent jobs to our foremost adversary,” Rep. Moolenaar argued. “At the same time, the CCP has taken advantage of our markets and betrayed the hopes of freedom and fair competition that were expected when its authoritarian regime was granted permanent normal trade relations more than 20 years ago.” Read more at this link.

In related news, a Bain consulting survey of executives at multinational companies with earnings totaling more than $1 billion found that 81 percent of executives at these firms plan to bring their supply chains closer to home, up from 63 percent just two years ago. The share of companies looking to move activity out of China is up to 69 percent, from 55 percent two years ago. Read more at this link.