The House is preparing to move a comprehensive package of China-focused legislation this Fall, including provisions to restrict outbound investment to China and revoke de minimis privileges for goods subject to Section 301 tariffs. This legislative effort, led by Speaker Mike Johnson (R-LA), addresses ongoing bipartisan concerns over China’s economic practices and their impact on the U.S. economy to counteract Beijing’s perceived exploitation of American trade policies.

The proposed restrictions of outbound investment are meant to prevent U.S. capital from bolstering China’s technological and industrial advancements. Revoking de minimis privileges set by The Trade Facilitation and Trade Enforcement Act (2016) would eliminate tariff exemptions for imported goods valued under $800. At present, many Chinese exporters take advantage of these exemptions to flood the U.S. market with tariff-free goods.

Similar legislative action has seen division within the House as lawmakers debate the best approach to addressing outbound investment. The Foreign Affairs Committee, led by Chairman Michael McCaul (R-TX) and Ranking Member Gregory Meeks (D-NY), supports codifying and expanding the Biden Administration’s executive order on outbound investment. The Financial Services Committee and Chairman Patrick McHenry (R-NC) prefer a sanctions-based approach as laid out in legislation proposed by Rep. Andy Barr (R-KY). The House came close to passing the McCaul-Meeks bill last winter as part of the National Defense Authorization Act 2024 (NDAA), but McHenry shot it down.

The House must reconcile differences between the Foreign Affairs and Financial Services committees to develop a cohesive strategy for restricting outbound investment. A swift coalescence will be essential with Johnson pushing to pass the legislative package by the end of the year to “empower the next Administration to hit our enemy’s economies on day one.”

The House will also focus on increasing investment in the maritime sector to counter China’s trade dominance at sea. This reinforces President Biden’s announcement in April that the Office of the U.S. Trade Representative (USTR) would launch a new Section 301 investigation into Chinese shipbuilding practices to protect American workers, appeasing the United Steelworkers and other major unions which submitted a petition to the agency in March calling for the probe.

Clients, friends and family only.