Managed Trade Is Coming; Will Your Sector Benefit from It?

Following a summit in Beijing between U.S. President Trump and General Secretary of the Chinese Communist Party Xi, on June 5 the Office of the United States Trade Representative opened a comment period for businesses to identify non-sensitive products that would benefit from favorable tariff modifications by both the People’s Republic of China and the United States through a future U.S.-China Board of Trade tasked with managing bilateral trade optimization.

This presents an opportunity for industry sectors to help shape the functioning of the U.S.-China Board of Trade and inform USTR’s efforts to balance the resulting trade between the two countries.

Written comments are due by July 10, 2026, with rebuttal comments due by July 27, 2026.

China: A Target of U.S. Tariffs in Flux

The United States has increasingly attempted to tailor its trade policy to meet both economic and security challenges presented by China. This has included tariffs imposed pursuant to various statutory authorities, such as those introduced in 2018 under Section 301 of the Trade Act of 1974 in response to Chinese intellectual property practices. In 2025, the Trump Administration imposed a series of country-specific tariffs on products of China pursuant to the International Economic Emergency Powers Act (“IEEPA”). These peaked at a combined 145% but had decreased to a combined 20% by the time that the Supreme Court held IEEPA tariff regimes to be unlawful.

The Trump Administration quickly pivoted to alternative authorities, beginning with 10% tariffs pursuant to Section 122 of the Trade Act of 1974, which applied to most products of China. These tariffs were also held unlawful by a panel of the U.S. Court of International Trade, a decision that the government has appealed.

Around the same time, USTR also announced several new investigations pursuant to Section 301 specifically covering China, among other U.S. trading partners. The first new investigation, initiated on March 11, 2026, concerns structural excess capacity and production in the manufacturing sectors of certain U.S. trading partners. The other new investigation concerns U.S. trading partners’ practices with respect to their own importation of products made using forced labor. USTR recently proposed tariffs of 12.5% on products of China in connection with the latter investigation.

A variety of other tariff regimes pursuant to Section 232 of the Trade Expansion Act of 1962 apply to specified products of China, as well as virtually all other countries. Moreover, additional Section 301 investigations covering, e.g., the Chinese shipbuilding and semiconductor sectors, have resulted in suspended or deferred tariffs or fees.

Status and Aims for the Board of Trade

Although “chartered,” the U.S.-China Board of Trade is not presently operational and the details of its structure and timeline for implementation remain uncertain, pending further bilateral negotiation. According to USTR’s notice, the U.S.-China Board of Trade is envisioned as a government-to-government channel for discussions on how to optimize the trade of non-sensitive products. USTR’s views it as an “adapter” to bridge certain differences in the American and Chinese economies. The extent to which the Board of Trade would serve as a sort of negotiating forum, as opposed to a more administrative mechanism, is unclear. In practical terms, USTR expects it to facilitate each country modifying “non-MFN tariffs” on imports of an equal value of non-sensitive goods from the other country.

The notice asserts that U.S. trade policy toward China likely will continue to rely on tariffs to counteract Chinese non-market policies and practices specifically enumerated as: disregard for intellectual property rights, subsidies and other industrial policies creating systemic overcapacity and overproduction in industrial sectors, diverse and deeply entrenched market access barriers, and lack of regulatory transparency. In recent years, however, the non-MFN tariffs imposed on Chinese goods by the United States have been framed as a reaction to these same practices. A mechanism specifically aimed at modifying those tariffs would be a modification of the U.S. response. In a sense, such fine-tuning is not new, as USTR has administered exclusions certain products from tariffs imposed on products of China pursuant to Section 301. Today, little remains of such exclusion procedures. USTR’s framing of the U.S.-China Board of Trade suggests that one possible manifestation would be a sort of bilateral quid pro quo exclusion process. However, implementing any outcomes of a U.S.-China Board of Trade would still require USTR to frame tariff adjustments in terms that comport with the standards of the statute under which the tariffs were adopted in the first place.

Request for Comments Concerning Tariff Modifications

In the initial phase, USTR invites U.S. businesses to identify “non-sensitive” Chinese products for potential tariff reduction by the United States, as well as U.S. products for which USTR would seek Chinese tariff reductions. To facilitate the tariff modifications, USTR requests that products be identified at the 8-digit level of the Harmonized Tariff Schedule of the United States (HTSUS) and asks commentators to reply to the following prompts:

1. What types of Chinese products, or Chinese products in particular sectors, should be considered non-sensitive in that they give rise to few, if any, issues related to economic and national security and supply chain resilience risks?
2. What products of China, currently subject to additional U.S. tariffs, should the United States import at lower tariff rates, such as MFN (Column 1) rates? Please provide the average annual value of U.S. imports of those products from China in 2022-2024.
3. Which, if any, U.S. consumers would benefit from this tariff modification?
4. Which, if any, U.S. consumers would be harmed from this tariff modification?
5. Which, if any, U.S. workers or producers would benefit from this tariff reduction modification?
6. Which, if any, U.S. workers or producers would be harmed from this tariff modification?
7. For a product identified in response to question 2 above, has the tariff on that product resulted in a tariff inversion whereby the tariff is higher on a given manufacturing input than on the downstream finished product? (Please specify the average differential between the tariff on the component at issue and the tariff on the relevant downstream product.)
8. What is China’s share of U.S. imports of each product identified in response to question 2? Please identify the product(s) and the market share.
9. Which, if any, products of the United States, currently subject to additional Chinese tariffs, should U.S. exporters be able to sell to the Chinese market at China’s MFN rates? Please provide the average annual value of U.S. exports of those products to China in 2022-2024.
10. Is any product identified in response to question 9 above (a) an “agricultural product,” defined as products covered by and listed in Annex 1 of the WTO Agreement on Agriculture; (b) an industrial product the export of which to China has declined significantly in recent years; or (c) a product subject to multiple Chinese tariff actions or exceptionally high Chinese tariffs?
11. Are there products that China still purchases, or would likely purchase, from the United States notwithstanding China’s additional tariffs above the MFN rate? Put differently, are there U.S. products currently subject to China’s tariffs above the applicable MFN rates whose exports to China have not been significantly affected by China’s tariffs, or for which China appears to be reliant on U.S. exports?

Request for Comments Concerning the Establishment of the U.S.-China Board of Trade

Second, USTR requests U.S. businesses to assist USTR in formulating its negotiating position with respect to the desired structure of the U.S.-China Board of Trade. Open questions pertain to logistical matters, including the frequency of monitoring and the design of mechanisms for assessing performance, each having significant implications for the arrangement’s durability. These prompts include:

1. How frequently should the U.S.-China Board of Trade convene in order to effectively monitor the balance of trade flows (in terms of dollar value and timing) and to ensure the effectiveness of the list of products identified as non-sensitive for the purpose of the tariff modification arrangement discussed above?
2. How should the U.S.-China Board of Trade assess when, and whether, to modify the composition or scope of the identified non-sensitive products?
3. What mechanism should be established to ensure the effective sharing of trade data between the two sides to allow for optimal functioning of the U.S.-China Board of Trade?

Rebuttal Phase

Consistent with USTR’s administration of past exclusion processes, comments are not intended to be one-sided. Rather, after receiving initial comments, USTR will open a rebuttal phase. Parties may, for example, rebut the assertions underlying requests to reduce U.S. tariffs on a given Chinese product of interest, or identify countervailing considerations that undermine the policy case for lowering tariffs. Thus, domestic producers with an interest in maintaining existing tariffs on products of China may wish to monitor USTR’s comment docket to identify products for which tariff reduction has been requested.

Why Should Businesses Comment?

The notice reflects a growing recognition within the Administration that tariff policy and industrial policy can complement one another to support U.S. businesses’ competitiveness in both domestic and global markets. Businesses within a specific sector may identify where tariff liberalization would be helpful and where tariff protection would be beneficial. For example, in certain sectors, due in large part to nonmarket policies that led to overcapacity, certain inputs may never realistically be produced outside of China. Meanwhile, the global competitiveness of downstream products can be undermined when input costs increase, yet concomitant tariff protection on the downstream good does not exist. In such circumstances, the “managed trade” framework introduced in USTR’s notice could provide opportunities for affected industries to make USTR aware of such concerns, and inform the calibration of U.S. tariff policy.

Conclusion

The attorneys, licensed customs brokers, compliance professionals, economists, and trade specialists of Cassidy Levy Kent regularly assist companies in evaluating their supply chains to ensure compliant market access and optimize for tariff-related developments, both mitigating burdens and taking advantage of opportunities. Businesses should be aware of the possible outcomes when planning or reviewing their supply chains.