On November 14, 2024, Chairman John Moolenaar (R-MI) of the House Select Committee on the Chinese Communist Party announced the introduction of the Restoring Trade Fairness Act (“RTFA” or “Act”), a bill that would revoke China’s Permanent Normal Trade Relations (“PNTR”) status with the U.S., a designation that has facilitated favorable trade terms since 2000, increase the rates of duty applicable to goods from China, and end de minimis imports from China.
The bill terminates China’s designation as a beneficiary of PNTR, effectively altering its trade treatment under U.S. law and the World Trade Organization framework. It mandates a minimum tariff rate of 35% under column 2 of the Harmonized Tariff Schedule of the United States (“HTSUS”) for Chinese goods currently subject to lower rates or duty-free treatment and a minimum tariff rate of 100% on specific Chinese goods listed in Section 10 of the bill. Section 10 of the bill contains almost 40 pages of various HTSUS codes proposed for the 100% increase.
The bill requires the President to phase-in the applicable duty increases over 5 years according to the following schedule:
10% of the total duty increase 180 days after the enactment of the bill
25% of the total duty increase 2 years after the enactment
50% of the total duty increase 4 years after the enactment
100% of the total duty increase 5 years after the enactment
The bill also authorizes the President to adjust such duties for inflation on a yearly basis with the first such inflation adjustment potentially retroactive to January 1, 2024.
The bill further requires the President to establish quotas for goods produced only in China based on information received from the International Trade Commission and the Department of Commerce on a yearly basis. Goods entered within the set duty rate quota will only be subject to the duty rate in place before the enactment of the Act – meaning regular rate when China still had PNTR with the U.S.
Importantly, the bill ends de minimis entry eligibility (under $800) for importations from China, which will significantly affect consumer sector and e-commerce. This will take effect on the date of the enactment of this Act and apply with respect to articles entered, or withdrawn from warehouse for consumption, on or after the date that is 15 days after such date of enactment.
The bill further requires that the goods imported from China be appraised based on the U.S. domestic value of such goods and not the price paid or payable for the goods by the importer in China, which is a standard valuation formula.
The bill authorizes the President to further impose duties, tariffs, or quotas if the President determines it “necessary to counteract the dependence of the United States on imports from … China or to penalize … China for unfair trading practices.” The bill also authorizes the President to prohibit the importation of any article from China if the President determines that “the importation of the article poses a threat to the national security of the United States; or the article is produced in a manner that constitutes an unfair trade practice; or violates human rights.
The bill establishes a fund for the collected duty revenue to be distributed to the exporters (domestic industry) hurt by Chinese retaliation and the remainder of the funds to be used for defense purposes.
Businesses with ties to Chinese markets or supply chains should assess potential risks and plan for changes in trade policy if the legislation advances further in Congress. As such, if your company relies on any imports from China and you would like to understand the full potential impact of this bill please contact one of our trade professionals here.