This bill, the "Restoring Trade Fairness Act," suspends normal trade relations with China, increases tariffs on Chinese goods, and establishes a fund to compensate U.S. producers for retaliatory trade actions by China, while also bolstering U.S. defense capabilities.
John Moolenaar
Representative
MI-2
The "Restoring Trade Fairness Act" suspends normal trade relations with China, leading to increased tariffs on Chinese goods, with the goal of countering unfair trade practices and bolstering domestic industries. It modifies duty rates, phases in increases, and allows the President to further adjust duties and establish quotas to reduce reliance on Chinese imports. The Act also establishes a trust fund to compensate U.S. producers for losses due to Chinese retaliation and allocates remaining funds to defense spending. Additionally, it directs changes to the U.S. list of agreed-upon duty rates on goods at the World Trade Organization and prohibits duty-free entry for articles originating from covered nations, even if valued at $800 or less.
China Trade Relations Overhaul: New Bill Could Hike Prices, Grant Sweeping Presidential Powers
The "Restoring Trade Fairness Act" (H.R."") aims to fundamentally change the U.S.-China trade relationship by suspending normal trade relations and slapping significantly higher tariffs on Chinese goods. The bill, introduced by Representative John Moolenaar, seeks to address what Congress sees as decades of unfair trade practices by China that have harmed American businesses and workers.
Tariffs and Trade Turmoil
The core of the bill revolves around increasing tariffs on Chinese imports. It proposes raising many tariffs to a minimum of 35%, and for certain goods, like those in Section V of the Harmonized Tariff Schedule (minerals, chemicals, plastics, rubber, and raw hides) and the articles listed in SEC. 10, to a minimum of 100%. These increases would be phased in over several years, starting with a 10% bump 180 days after enactment, reaching the full increase after five years (SEC. 4). For context, imagine a product currently taxed at 10%; under this bill, that tax could eventually jump to 35% or even 100%, potentially impacting consumer prices and business costs. The bill also directs the U.S. Ambassador to the WTO to change the US list of agreed upon duty rates on goods. (SEC. 6). This change will allow the U.S. to deny normal trade relations to a WTO member without violating the agreed-upon duty rates.
Presidential Power Play
Beyond the tariff hikes, the bill grants the President sweeping new powers to regulate trade with China (SEC. 4). The President could further modify duties to address "U.S. dependence" or "unfair trade practices," establish quotas to limit Chinese imports, and even outright prohibit imports deemed to threaten national security or violate human rights. This level of authority raises concerns about potential overreach and the politicization of trade policy. The bill also changes how goods from China are valued for import, using the "United States value" – the price of similar goods sold in the U.S. – instead of the transaction value (SEC. 5). This change could further increase the assessed value of Chinese goods, leading to even higher duties.
Retaliation and Revenue
Recognizing the potential for China to retaliate against U.S. exports, the bill sets up a trust fund to compensate American producers hurt by Chinese actions (SEC. 8). This fund would be financed by the increased duties collected on Chinese goods. Any remaining funds would be funneled to the Department of Defense to purchase a wide range of weapons systems, specifically those deemed useful for defending Taiwan and other allies in the Indo-Pacific region from potential Chinese aggression. It is worth noting that this trust fund sunsets after 10 years, and any remaining money goes to deficit reduction. The bill also modifies the de minimis threshold, meaning those cheap, online, direct-from-China shipments under $800 will no longer be duty-free (SEC. 7). This change, effective 15 days after enactment, could impact consumers who rely on these low-value imports.
Challenges and Conflicts
While the bill aims to level the playing field with China, it faces several potential challenges. Altering commitments to the World Trade Organization (WTO) could damage the U.S.'s standing in the international community and potentially lead to trade disputes (SEC. 6). Furthermore, the broad authority granted to the President raises concerns about potential abuse. The bill's sponsor, John Moolenaar, has received significant funding from industries such as manufacturing and energy, and this bill could disproportionately benefit these industries, raising concerns about a potential conflict of interest. The bill also authorizes more funding for the United States International Trade Commission (SEC. 9).