Manufacturers on Alert: Congress Targets China with New Trade Legislation

Although President Trump has yet to follow through on the tariff hikes against China that dominated his reelection campaign rhetoric, the heat on U.S.-China trade is intensifying from another front: Congress. In January 2025, the bipartisan Restoring Trade Fairness Act, which aims to revoke China’s Permanent Normal Trade Relations (PNTR) status, introduced fresh uncertainty into an already complex global trade environment for U.S. manufacturers.

The legislation proposes steep tariffs—35% on non-strategic imports and up to 100% on strategic goods—phased in over five years. For industries heavily reliant on Chinese components, such as automotive, heavy machinery, and electronics, the implications are significant.

A Legislative Wake-Up Call

The Restoring Trade Fairness Act aims to recalibrate the U.S.-China economic relationship, driven by concerns over job losses, trade deficits, and national security. At the heart of this effort is the potential revocation of PNTR status, often called “most favored nation status,” which allows a country’s exports to the U.S. to benefit from lower tariffs. While some countries require annual waivers to maintain this status, China was granted it permanently in 2000, spurring a sharp rise in trade between the two nations.

Since then, U.S. imports from China have surged, flooding the market with low-cost goods but, critics argue, eroding key sectors of American manufacturing. A Stanford study estimated that the “China shock” accounted for 59.3% of all U.S. manufacturing job losses between 2001 and 2019.

The proposed legislation seeks to reverse this trajectory by gradually implementing tariffs to give businesses time to adapt. However, industries deeply integrated with Chinese supply chains—like automotive—may face significant disruptions, with some industry reports estimating a 4% GDP reduction for the sector due to rising costs and supply delays.

Ripple Effects for U.S. Manufacturers

If enacted, the legislation would fundamentally disrupt cost structures across industries. Manufacturers reliant on Chinese-sourced parts face difficult choices: absorb higher costs, pass them on to customers, or overhaul supply chains. Sectors like machinery, long dependent on Chinese components, could see temporary disruptions while transitioning to alternative suppliers.

While manufacturers have weathered previous challenges, such as trade wars and the pandemic, the potential revocation of China’s PNTR status marks a deeper and more systemic shift. Unlike earlier trade tensions targeting specific products, this legislation applies sweeping tariffs across a broad range of goods. Its scope could force companies to rethink their strategies, prioritizing resilience over short-term efficiency to navigate an evolving trade landscape.

Not the First, but a Stronger Push This Time

This is not the first time Congress has floated the idea of revoking China’s PNTR status. Similar bills introduced in 2023 and 2024 failed to gain traction and ultimately stalled in committee. However, this time appears different. The introduction of the Restoring Trade Fairness Act comes amid mounting bipartisan support for rethinking U.S.-China trade relations.

Adding weight to this effort is a recent report from the U.S.-China Economic and Security Review Commission, explicitly recommending the repeal of China’s PNTR status. This alignment between legislative proposals and advisory recommendations signals growing momentum, particularly with both chambers of Congress now under Republican majority control.

Even if the bill doesn’t pass in full, some proposals—such as higher tariffs on strategic goods or updated valuation rules for imports—may still become law. For manufacturers reliant on Chinese components, this underscores the need to monitor developments and prepare for potential trade shifts that could ripple across supply chains.