Revoking PNTR for China Would Shift Sourcing, Increase Prices, ITC Report Says

A report from the International Trade Commission finds that the revocation of permanent normal trade relations treatment for goods imported from China would have mixed effects on U.S. consumers and producers.

The report states that duty rates for manufactured products from China would increase by 28.8 percentage points, compared to increases of 7.3 and 0.8 percentage points for agriculture products and mining and energy products, respectively. As a result, U.S. consumers and producers would adjust their purchases away from Chinese imports, which would fall 30.8 percent after six years and 73.8 percent in the long run.

Instead, imports from other trading partners would increase, especially from Mexico, Taiwan, Vietnam, Canada, Japan, and South Korea. Purchases of domestic shipments would see small increases as well, by 0.6 percent in the sixth year and 1.8 percent in the long run.

Over time, the report states, these changes would result in U.S. consumers and producers facing price increases of 0.7 percent and 0.5 percent, respectively, and higher prices on intermediate goods would reduce real output by 0.2 percent.

Meanwhile, most domestic industries would have small (usually less than one percent) declines in real output, with the extent of the effect depending on their reliance on Chinese intermediate goods and other competitiveness dynamics. Some domestic industries that face relatively high import competition from China would likely experience growth in real output as prices rise, imports from China fall, and domestic shipments increase. However, U.S. real output would be lower each year compared to the baseline as the widespread increase in input costs would raise production expenses and outweigh the gains in industries that compete with Chinese imports.