From 2000 to 2026: America Plans to Dismantle the Legal Foundation of Trade with China

Li Zhide

On May 24, 2000, after a fierce debate, the U.S. House of Representatives voted 237 to 197 to approve legislation granting China permanent normal trade relations. On October 10, President Bill Clinton signed the U.S.-China Relations Act into law as Public Law 106-286. China had in fact enjoyed normal trade relations with the United States since 1980, but under the framework of the Jackson-Vanik Amendment that status had been subject to periodic review in the American political process. The 2000 law changed that. Once China joined the World Trade Organization, the United States could grant it permanent, nondiscriminatory normal trade treatment without reopening the issue year after year. After China joined the WTO in December 2001, this arrangement became part of the basic legal structure of U.S.-China economic relations.

The logic at the time was not difficult to understand. Mainstream American policymakers believed that integrating China more deeply into the global trading system would produce at least three results: American companies would gain access to a vast market, American consumers would receive more inexpensive goods, and China itself would alter its economic behavior as it entered a rules-based global trading order. The Clinton administration regarded permanent normal trade relations, or PNTR, as an important part of its broader strategy of engagement with China. Looking back on that history in 2004, U.S. Trade Representative Robert Zoellick still emphasized that PNTR had emerged after years of annual congressional debate and ultimately became an institutional arrangement supported by a bipartisan majority.

A generation later, the political landscape has changed almost beyond recognition. On August 21, 2026, the U.S. International Trade Commission is expected to release Investigation No. 332-609, bluntly titled “Effects on the U.S. Economy of Revoking China’s Permanent Normal Trade Relations Status.” The commission is no longer being asked whether another 10 or 25 percent tariff should be imposed on selected Chinese products. It is examining a more fundamental question: what would happen to U.S. trade, industry, prices, and sources of supply if the United States revoked China’s PNTR status? The investigation also includes an alternative scenario examining what would happen if Congress ended PNTR and phased in higher tariffs over five years on certain products connected to national security. Because the schedule is compressed, the commission is not holding a public hearing and is relying instead on written submissions.

The report will not decide the issue for Congress. A Section 332 investigation is a fact-finding exercise. It provides independent analysis and does not make policy recommendations. There is therefore no factual basis for saying in advance that the August 21 report will “certainly endorse revoking China’s PNTR.” What matters is that American politics has turned a question that would have seemed almost unimaginable more than twenty years ago into a formal government research project: Should the legal foundation laid in 2000 for U.S.-China trade still be preserved? What deserves attention is not merely how much higher Washington may want tariffs to go. The deeper shift is that restrictions on trade with China are moving from tools that presidents can adjust toward institutional arrangements that some members of Congress are trying to lock into law.

Looking back now, the point is not to prove that the people of 2000 were “foolish” or that those of 2026 are “right.” History is far more complicated than that kind of retrospective judgment. After China entered the WTO, U.S.-China trade expanded rapidly. American consumers, retailers, multinational corporations, and many export industries benefited. At the same time, manufacturing employment, the bilateral trade deficit, industrial relocation, intellectual-property disputes, subsidies, and dependence on Chinese supply chains became increasingly central to American political debate. By Donald Trump’s first term, the old assumption that the United States could bring China into the system and then encourage it to change within that system was steadily giving way to another conclusion: the United States needed to change the terms under which China participated in the system.

The Section 301 tariffs imposed beginning in 2018 marked a turning point. But one distinction is often overlooked. The repeated imposition of Section 301 tariffs on Chinese goods did not mean that China had already lost PNTR. The two systems continued to coexist. Chinese products still entered under the normal trade relations tariff schedule as their base rate, while some products were subject to additional Section 301 and other duties. As of 2026, the Congressional Research Service still notes that the tariffs imposed on Chinese goods under Section 301 of the Trade Act of 1974 during the first Trump administration remain in force.

In other words, much of the trade war of the past eight years has involved adding more and more locks to the same house. What some members of Congress are now considering is whether to touch the foundation itself.

The distinction is visible in the U.S. Harmonized Tariff Schedule. Column 1 applies to the overwhelming majority of countries that enjoy normal trade relations with the United States. Column 2 applies to the small group that do not. The countries currently listed in Column 2 are Belarus, Cuba, North Korea, and Russia. Moving China from Column 1 to Column 2 would therefore carry political meaning far beyond an ordinary tariff increase. It would mean that the United States no longer placed China in the same legal category as most of its normal trading partners.

And Congress already has legislative language on the table. On January 23, 2025, Representative John Moolenaar and Democratic Representative Tom Suozzi introduced H.R. 694, the Restoring Trade Fairness Act. Senator Tom Cotton and others introduced the Senate version, S. 206. Both bills center on ending China’s PNTR status. The House bill does not simply say that China would thereafter fall under Column 2. It goes further by creating a tariff structure specifically for China: beginning from Column 2 rates, it would establish a minimum ad valorem tariff of 35 percent where the existing rate is lower, and for certain products listed in Section 10, a minimum rate of 100 percent where the existing rate falls below that level. Most of the increases would be phased in over five years. The bill also changes the rules governing the $800 de minimis exemption and restricts access to that treatment for goods from designated countries.

But “a bill has been introduced” is not the same as “the United States has decided to revoke PNTR.” H.R. 694 and S. 206 are still proposed legislation, not law. The House version has bipartisan sponsorship. The Senate bill, by contrast, was introduced by Republicans including Cotton, Jim Banks, and Josh Hawley. Congress has not yet reached a bipartisan consensus on revoking China’s PNTR status.

That is why the real question is not whether these bills will pass tomorrow. The more important question is why the idea of revoking PNTR has moved from the political margins into formal economic assessment and actual legislative text.

The Supreme Court added another institutional layer to the debate on February 20. In Learning Resources v. Trump, the Court ruled that the International Emergency Economic Powers Act, or IEEPA, did not authorize the president to impose tariffs. The decision directly limited one legal path through which a president might use a declared “national emergency” to levy sweeping duties.

But that does not mean that presidents can no longer impose tariffs, nor does it mean that “congressional legislation is the only route left.” Presidents still possess authority under other trade laws previously enacted by Congress. Section 301 addresses unfair foreign trade practices. Section 232 concerns national security. Section 201 deals with import surges. Each provides a different degree of executive authority over tariffs. In fact, in 2026 the Office of the U.S. Trade Representative is still using Section 301 investigations to support new trade actions, while the existing China tariffs are undergoing another four-year review.

The more accurate conclusion is this: the Supreme Court ruling again exposed the legal limits of tariff measures based on executive power, while a congressional decision to revoke PNTR would have an entirely different degree of institutional durability.

Executive actions taken under delegated authority can change because of court rulings, policy revisions, exemptions, or a new administration. Laws passed by Congress can also be amended, of course, but reversing them normally requires another legislative process. The political transaction costs are entirely different. This is what makes the possibility of “writing the trade war into law” so consequential.

A tariff is, at one level, a price. A 25 percent tariff imposed today can become 10 percent tomorrow, or disappear after the two sides reach an agreement. PNTR, however, is first of all a matter of legal status. It answers a different question. Not “How much duty does this Chinese product pay today?” but rather: “What category of country is China in under American trade law?”

Once that status changes, businesses no longer face only short-term tariff risk. If an American company believes a tariff may disappear in two years, it may wait. If it believes a higher tariff has been written into law by Congress and normal treatment can return only through another legislative act, it will reconsider suppliers, factories, inventories, sourcing locations, and long-term investment. Vietnam, Mexico, India, or production within the United States may attract more capital as a result. Once such supply-chain shifts occur, they create new economic constituencies. Those constituencies, in turn, may support keeping the policy in place.

This is institutional path dependence:

law changes expectations → expectations change investment → investment changes supply chains → supply chains create new political interests → those interests reinforce the original law.

The hardest thing to reverse, therefore, may not be a particular tariff rate. It may be the industrial and political structure that forms around high tariffs.

None of this would be costless. Revoking China’s PNTR status would not magically eliminate American demand for Chinese goods. Some imports could shift to third countries. Some production could return to the United States. But some products could also become more expensive because of China’s cost advantages, scale, and dense supplier networks. Higher import costs for businesses, higher consumer prices, the cost of Chinese intermediate goods used by American manufacturers, and possible Chinese retaliation against U.S. agriculture and other export sectors would all enter the final accounting. That is precisely why Investigation 332-609 asks the U.S. International Trade Commission to examine trade, domestic production, prices, and sources of supply, rather than merely calculating how many American firms might be protected by higher tariffs.

This is what gives August 21, 2026, its real importance. It will not be a starting gun. Nor will it prove that revoking PNTR has “locked and loaded.” What matters is that the U.S. government is, for the first time in such a formal way, calculating the economic consequences of a post-PNTR era with China.

Twenty-six years ago, Washington was doing a different calculation: what might the United States gain by giving China permanent normal trade treatment and bringing it more fully into the global market?

Twenty-six years later, it is beginning to calculate another: what would the United States pay, and what might it gain, if that treatment were withdrawn?

The change in the question may matter more than the eventual answer.

Washington in 2000 was largely asking:

How can China be integrated more fully into an international trading system led by the United States?

In 2026, a growing number of people in Washington are asking:

How can the United States reduce its economic dependence on China while raising the cost of Chinese access to the American market?

That is the real historical turn of the past twenty-six years.

Whether Congress ultimately revokes China’s PNTR status remains uncertain. American businesses, consumers, importers, retailers, agricultural states, and those worried about inflation and supply-chain costs will all take part in the political struggle. The USITC report may itself identify substantial domestic costs for the United States. But something else has already happened. The question of whether China should continue to enjoy permanent normal trade relations has once again become something American politicians can openly debate, government agencies can formally calculate, and members of Congress can directly legislate.

That alone marks a threshold.

Since 2018, the central logic of the U.S.-China trade war has still been to raise the price of Chinese goods entering the United States while remaining within the broader legal structure established earlier. The debate over revoking PNTR goes one step further. It begins to touch the legal status of the bilateral trade relationship itself.

Tariffs can still be negotiated. Laws can also be changed, but not as easily as an executive order.

The real question to watch, therefore, is not whether the August 21 report contains a dramatic average tariff figure or a particularly hawkish sentence. It is whether American politics is forming a new long-term consensus: that economic competition with China should not depend on one president, and should not disappear when that president leaves office, but should instead be embedded in U.S. trade law, industrial policy, and the national-security system.

Only if that process is completed will the nature of the U.S.-China trade war truly change. It would no longer be primarily a negotiation over how high tariffs should be. It would increasingly become an institutional contest over how much economic distance the two countries should maintain.

In 2000, the United States laid an important piece of domestic legal foundation for China’s entry into the global trading system.

In 2026, Washington is seriously considering whether to tear it up—and return to the world that existed before 2000.