- U.S. consumers will face significant price increases on products like semiconductors, vaccines, and solar panels.
- Eliminating the de minimis rule means even small purchases under $800 from China will no longer be duty-free.
- Valuation changes will create added administrative burdens for businesses importing Chinese goods.
- Higher costs for manufacturers relying on Chinese imports will disrupt supply chains and inflate prices across industries.
On November 14, 2024, Representative John Moolenaar (R-Mich.) introduced the Restoring Trade Fairness Act, a bold legislative move to revoke China’s Permanent Normal Trade Relations (PNTR) status. This bill mirrors a Senate proposal by Senators Tom Cotton, Marco Rubio, and Josh Hawley.
The proposed law would impose escalating tariffs on Chinese imports over five years, starting at 35% and reaching a staggering 100% on strategic goods, including semiconductors, defense equipment, and vaccines. It also eliminates the de minimis exemption for shipments under $800 and introduces a new method of valuation that appraises goods based on U.S. market prices. While proponents claim these measures will punish China for unfair trade practices, the real burden will fall on American consumers and businesses—not Chinese manufacturers.
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Tariffs are taxes paid by importers, not by foreign manufacturers or governments. Every time tariffs are raised on Chinese goods, it is American companies and consumers that shoulder the cost. The Restoring Trade Fairness Act’s provisions would dramatically raise the price of key imports, including essential technological components and consumer electronics. Many of these products are not easily sourced from alternative countries due to China’s entrenched dominance in global supply chains. Consequently, U.S. manufacturers relying on Chinese imports will face significant cost increases, leading to higher retail prices for American consumers.
Consider semiconductors, one of the strategic goods targeted for tariffs of up to 100%. Semiconductors are the backbone of modern technology, powering everything from smartphones to electric vehicles. China’s role in the global semiconductor market—while secondary to Taiwan—remains critical in producing components and assembly.
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The imposition of these tariffs will not only increase the cost of electronics but could also exacerbate existing chip shortages, further straining industries that depend on these products. American manufacturers using Chinese semiconductors or their derivatives will either absorb unsustainable losses or pass the increased costs to consumers.
The removal of the de minimis rule, which currently exempts shipments valued under $800 from duties, will have widespread repercussions for small businesses and individual consumers. Online shoppers frequently purchase low-value goods directly from Chinese platforms like AliExpress, Shein, and Temu.
Under the new law, these purchases would no longer be exempt from tariffs, leading to price hikes on a vast array of consumer goods, from clothing to household gadgets. The convenience of affordable e-commerce, which many Americans have come to rely on, will diminish as costs surge.
The valuation requirement under the Restoring Trade Fairness Act represents another costly administrative burden. Importers would need to declare the U.S. market value of Chinese goods rather than using the standard WTO Customs Valuation Agreement. This change would complicate customs procedures and increase compliance costs, disproportionately affecting small and medium-sized enterprises that lack the resources to handle complex import regulations. Higher compliance costs will inevitably translate to higher consumer prices.
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The argument that these tariffs will compel China to reform its trade practices is tenuous at best. Similar tariff policies under the Trump administration did little to change China’s economic behavior. Instead, Chinese exporters often absorbed minimal losses by adjusting prices or shifting production to other countries, while American consumers bore the brunt of price increases. Moreover, China could retaliate by imposing its own tariffs on U.S. goods, further harming American farmers and manufacturers reliant on exports to the Chinese market.
A trust fund established by the bill to compensate U.S. industries for losses resulting from Chinese retaliation offers limited relief. While this mechanism might provide short-term support, it does not address the broader economic distortions caused by escalating trade barriers. Similar compensation schemes, like the now-repealed Continued Dumping and Subsidy Offset Act (CDSOA), faced significant legal challenges at the World Trade Organization (WTO) and were ultimately unsustainable.
The WTO itself could become a flashpoint if the U.S. unilaterally revokes China’s PNTR status and raises tariffs beyond agreed-upon levels. The international trade body’s dispute resolution mechanism may rule against the United States, leading to further retaliatory measures and undermining global trade norms. Such actions risk alienating U.S. allies who rely on a rules-based international trade system, complicating broader efforts to counter China’s trade practices through multilateral cooperation.
Beyond geopolitical and legal ramifications, the economic impact on American households cannot be ignored. Higher tariffs on goods like solar panels, electronics, and household appliances will inflate utility bills and consumer spending. Inflationary pressures—already a concern in recent years—will intensify, disproportionately affecting low- and middle-income families. Essential goods that rely on Chinese components, including medical devices and prescription drugs, could also become more expensive, creating additional financial strain.
The proposed legislation grants the President the authority to impose additional quotas and tariffs but notably lacks provisions for reducing them. This one-sided approach limits flexibility and increases the likelihood of prolonged trade tensions. By prioritizing punitive measures over strategic engagement, the United States risks isolating itself economically while China continues to expand trade partnerships through initiatives like the Regional Comprehensive Economic Partnership (RCEP) and the Belt and Road Initiative.
Rather than doubling down on tariffs, U.S. policymakers should focus on enhancing domestic competitiveness. Investing in infrastructure, education, and technological innovation would yield more sustainable economic benefits than punitive trade measures. Policies that incentivize supply chain diversification and strengthen relationships with trusted trade partners could reduce dependency on Chinese goods without imposing direct costs on American consumers.
In conclusion, the Restoring Trade Fairness Act—despite its title—may do more harm than good for American consumers and businesses. While addressing trade imbalances with China is a legitimate policy goal, the current proposal’s heavy-handed tariff increases will raise prices on essential goods, burden small businesses, and invite international legal challenges. A more balanced approach, emphasizing domestic investment and multilateral trade alliances, offers a more effective and economically sound path forward.