This paper examines the sharp decline in U.S. manufacturing employment from 2001 to 2007, which was accompanied by a significant increase in imports from China. The authors find a strong link between this decline and the U.S. granting of Permanent Normal Trade Relations (PNTR) to China, which eliminated the uncertainty associated with annual renewals of NTR status. PNTR reduced the threat of tariff hikes on Chinese imports, leading to increased competition and suppressed U.S. employment growth. Industries with the highest NTR gaps experienced more severe employment losses and larger increases in Chinese imports. The paper also explores the impact of PNTR on U.S. firms' investment decisions and the adjustment of capital and skill intensity within plants. The findings suggest that PNTR had a more profound effect on production workers than non-production workers, and that the decline in employment was concentrated in industries most exposed to the policy change. The results are robust to other potential explanations, such as changes in Chinese policy and economic developments in the U.S. and EU.This paper examines the sharp decline in U.S. manufacturing employment from 2001 to 2007, which was accompanied by a significant increase in imports from China. The authors find a strong link between this decline and the U.S. granting of Permanent Normal Trade Relations (PNTR) to China, which eliminated the uncertainty associated with annual renewals of NTR status. PNTR reduced the threat of tariff hikes on Chinese imports, leading to increased competition and suppressed U.S. employment growth. Industries with the highest NTR gaps experienced more severe employment losses and larger increases in Chinese imports. The paper also explores the impact of PNTR on U.S. firms' investment decisions and the adjustment of capital and skill intensity within plants. The findings suggest that PNTR had a more profound effect on production workers than non-production workers, and that the decline in employment was concentrated in industries most exposed to the policy change. The results are robust to other potential explanations, such as changes in Chinese policy and economic developments in the U.S. and EU.