Abstract: Recently, the United States has introduced a series of tariff policies, ushering the global economic order into an era of “institutional uncertainty”. The United States has not only imposed additional tariffs on Chinese goods and expanded the tax base but also enacted targeted tariff measures in the technology sector. Additionally, it indicates a potential review of whether to suspend or terminate the United States-People’s Republic of China Income Tax Convention. In the current international economic climate, the tax treaty has moved beyond mere economic considerations to become a significant tool in international relations. This article focuses on the basic motives of the potential suspension or termination of the Income Tax Convention between China and the United States, then analyzes the multi-dimensional impacts of this change on China’s FDI, China’s outward FDI, and domestic economy in China if the tax treaty were to be suspended or terminated. Finally, it explores further the negative consequences and the challenges of the global economic governance system amid the uncertainty of tax rules.

Basic Motives and Impacts of the Suspension or Termination of the Income Tax Convention Between China and the United States