US-China: No 60% PNTR-related tariffs

• Punchbowl News reports that President-elect Donald Trump’s win of the US election has already prompted congressional Republicans to look into ways of advancing their goal of repealing China’s so-called ‘permanent normal trade relations’ (PNTR) status – essentially stripping the country of its current tariff ‘rights,’ and potentially leading to an increase in tariffs on Chinese goods toward the oft-threatened 60% mark.
  • We are doubly-skeptical, as we have long noted:
    • First, we do not believe Congress will repeal China’s PNTR:
      • Even with a ‘red sweep,’ Republicans would need Democrats to cross the aisle and support President-elect Donald Trump’s agenda in order to reach 60 votes in the Senate – something we are not convinced of.
      • Even the unanimous support of all Republican senators and congresspeople itself is far from guaranteed, given the contentiousness of such policies in states with vulnerable and/or trade-exposed Republican incumbents.
    • Second, if Congress were to repeal the PNTR, it wouldn’t really be repealing it:
      • Even the most hawkish of advocates are not arguing for China to face pre- most favored nation (MFN) status tariff levels, but rather advocate that the country should:
        • 1) Be reminded that its MFN status is not a ‘God-given right,’ but rather something it must continue to ‘deserve’ (via annual renewal votes).
        • 2) Potentially be subject to higher tariffs than it currently is; which need not mean maximalist tariffs.