U.S. Launches Investigation to Attempt to Cancel China's Most Favored Nation Status? Experts: The U.S. May Hope to Use This as Negotiation Leverage

On the 26th local time, the U.S. International Trade Commission (USITC) announced it will conduct an investigation to assess the impact of revoking China’s Permanent Normal Trade Relations (PNTR) status under a six-year scenario. The results are expected to be announced before August 21. Reuters reported that this move could lead the U.S. to raise tariffs on Chinese imports.

USITC stated that the investigation will focus on trade, production, and pricing conditions in U.S. industries that could be directly and most affected by the increase in tariffs on Chinese goods to higher non-MFN rates. USITC will also study another scenario: if the U.S. Congress revokes China’s PNTR status, implementing partial tariffs on critical products related to national security over five years.

Reuters noted that revoking China’s PNTR status would raise the basic Most Favored Nation (MFN) tariff rate and add any punitive tariffs imposed by President Trump. It was reported that when Trump took office in January last year, he instructed trade and commerce officials to evaluate legislation proposals to cancel China-U.S. permanent normal trade relations.

According to a report previously released by Chen Xing, an analyst at Caitong Securities, since the normalization of China-U.S. relations in 1979 and the signing of the Trade Relations Agreement, China has received U.S. MFN treatment (the predecessor of PNTR), though this treatment still required annual review by the U.S. Congress. In 2000, the U.S. passed the China Trade Relations Act, officially granting China PNTR status. However, since 2001, U.S. lawmakers have repeatedly proposed bills calling for the abolition of China’s PNTR. Such bills require approval by a majority vote in both houses of Congress and signature by the President, but most related bills have been shelved after being referred to congressional committees.

USITC stated that this investigation will analyze the impact of revoking China’s PNTR on the U.S. economy, industries, and import sources, and will produce an independent analysis without policy recommendations or other matters. However, amid significant changes in U.S. tariff policies and as Trump plans to visit China and China and the U.S. prepare for the sixth round of trade negotiations, the frequent contradictory signals from the U.S. have attracted external attention.

Huo Jianguo, Vice President of the China WTO Research Institute, told Global Times on the 27th that historically, many of the U.S. political attempts to revoke China’s PNTR status failed because domestic economic interests were not realized. The USITC investigation provides a policy reference for the government but is not a legal procedure for cancellation. It does not necessarily mean that U.S. authorities are seriously considering revoking China’s PNTR, especially given the intense trade relationship between the two major economies, which could harm both economies and have global repercussions.

In the White Paper titled “The Chinese Position on Several Issues in China-U.S. Economic and Trade Relations” issued in 2025, China pointed out that PNTR status is a core foundation of China-U.S. economic and trade relations. Revoking PNTR would revert China-U.S. trade relations to a state lacking certainty and predictability, similar to before China joined the WTO in 2001, and could even lead to economic “decoupling.”

Jiaoyan Yun, a professor at the School of International Relations at Renmin University of China, told Global Times that the USITC investigation is not new but serves as a reminder that some U.S. forces continue to push for trade restrictions to suppress China. As China and the U.S. are about to hold trade talks, it is possible that the U.S. aims to use this investigation to gain more leverage in negotiations.

Source: Global Times

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