Source=MP4, Sequence settings=I-Frame Only MPEG, export settings= Match sequence, Why not MP4 output

Two comments ...

First, most mp4 media is 'long-GOP' ... meaning there are only complete or i-frames every 30 or more frames of the clip, and in-between are only data-sets of 1) pixels that have changed since the last i-frame; 2) pixels that will change before the next i-frame; or 3) BOTH.

This means there isn't a simple 'trim a couple frames off' action possible. Premiere will have to decompress the needed i-frames, then call up the data-sets for the other needed frames, and create the video frames of media. It isn't at all like trimming an intraframe media clip.

Second ... Premiere is a non-linear editor or NLE, not a re-muxing app. Muxing apps tend to cut bits here and there, create a few frames, and then export the final file. It's a very different process.

So Premiere is expecting to take the media from the timeline and export a new file into the format/codec you set in the Export dialog.

Previews, made from the media on a sequence to help with playback, are a different thing. Previews can be used in the export in a "smart preview" process, if the sequence preview settings are the same as the expected export dialog. However, I'm not sure that long-GOP previews can be used for this.

Neil

In Premiere Pro that is not possible with H.264 media.

Try TMPGEnc MPEG Smart Renderer 5. This can do what you want, trim an H.264 and smart render out the result in seconds without any generational loss.