Revoking China’s favorable trade status would backfire on the U.S. economy, with sectors such as agriculture especially hard hit, according to the Peterson Institute for International Economics.
The report estimates gross domestic product (GDP) would be 0.22%, or $56 billion, lower in 2027 if the United States were to end permanent normal trade relations, or PNTR, with China. U.S. inflation would be 0.4 points higher in 2025 due to the imposition of new tariffs on imports on China. Without PNTR, U.S. tariffs on Chinese goods would rise about 38 percentage points, the report says.
If China were to retaliate against U.S. exports, projected losses to U.S. agriculture and manufacturing of durable goods would nearly double, the report says. Chinese retaliation would result in cumulative losses to the U.S. economy of $158.7 billion from 2025-28, with $70.1 billion of that coming in agriculture, according to PIIE's report.
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"Retaliation by China would increase job losses across the economy but especially in agriculture and durable manufacturing — the very sectors the new tariffs are intended to support," the report says.
Although lawmakers have been sharply critical of China over the past two years, Congress has made no move to revoke PNTR.
The House Select Committee on the Chinese Communist Party in December called for increasing tariffs on China and taking steps to protect farmers from retaliation. However, the report fell short of recommending revocation of PNTR, which provides some limits on duties.
At the Republican convention, vice presidential candidate JD Vance criticized President Joe Biden for supporting PNTR for China when he was in the Senate.
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