What Every Multinational Should Know About … The Opportunity to Shape the Next Phase of U.S.-China Tariffs

For nearly eight years, most importers were forced to react to an ever-changing landscape of tariffs on imports from China. For perhaps the first time since the Section 301 tariffs were imposed, companies now have a meaningful chance to influence what that tariff landscape looks like going forward.

Following the May 2026 meeting between President Trump and President Xi Jinping, the Office of the U.S. Trade Representative (USTR) announced a public comment process intended to help shape the next phase of U.S.-China trade negotiations. USTR is accepting comments through July 10 regarding which Chinese-origin products should be prioritized in negotiations. The comments are expected to help identify approximately $30 billion in bilateral trade that may become eligible for lower tariff treatment through a newly established U.S.-China Board of Trade, while also identifying U.S. exports that should receive reciprocal tariff reductions by China.

Unlike previous Section 301 exclusion proceedings, this is not simply another opportunity to seek temporary relief from existing tariffs. Instead, USTR is identifying candidates for longer-term tariff liberalization in the broader bilateral trade framework. U.S. Trade Representative Jamieson Greer has explained that the comments will help inform negotiations with China regarding where the two countries have the strongest opportunities for mutually beneficial trade. That makes this proceeding relevant not only for companies that currently benefit from existing Section 301 exclusions but also for businesses whose prior exclusion requests were denied, companies that continue to rely on Chinese sourcing because commercially reasonable alternatives remain unavailable, and U.S. exporters seeking improved access to the Chinese market.

There is no assurance that USTR will ultimately reduce tariffs on any particular product. However, companies that choose not to participate may forfeit an important opportunity to inform the factual record underlying the United States’ negotiating position. Companies that do participate — and that support their positions with well-developed factual and economic evidence — will likely be best positioned to influence USTR’s negotiating priorities and the next phase of the U.S.-China tariff framework.

Why Is This Proceeding Different From the Prior Section 301 Exclusion Process?

Many importers may initially view this proceeding as simply another opportunity to request a Section 301 exclusion. While there are similarities, the objectives of the new process are fundamentally different.

The prior Section 301 exclusion process generally focused on whether specific products should receive temporary relief from tariffs that otherwise remained in place. This proceeding instead is intended to help shape a broader bilateral framework governing trade in products that both governments determine are “non-sensitive.” Rather than asking whether a particular importer should receive an exclusion, USTR is identifying categories of products for potential tariff reductions in U.S.-China trade negotiations.

To that end, USTR is seeking comments regarding which Chinese-origin products present few, if any, concerns relating to economic security, national security, or supply chain resilience, and therefore may warrant reductions in additional tariffs imposed under authorities such as Section 301 and, potentially, Section 232. At the same time, USTR is also seeking recommendations regarding U.S. exports that should receive reciprocal tariff reductions from China.

This broader policy focus means that companies should not assume prior Section 301 exclusion decisions determine the outcome here. Importers whose exclusion requests were previously denied may have a meaningful opportunity to present new arguments based on current market conditions, sourcing challenges, and the broader policy objectives underlying these negotiations. Likewise, companies currently benefiting from existing Section 301 exclusions should not assume those exclusions will simply continue without further action.

Another significant distinction is that this proceeding involves the creation of an ongoing institutional framework rather than a one-time tariff decision. USTR is seeking comments regarding the proposed U.S.-China Board of Trade (the Board), a government-to-government body that would oversee trade in designated non-sensitive products and provide a mechanism for future tariff adjustments. Among other things, USTR requests input regarding how frequently the Board should meet, how products should be added to or removed from the list of non-sensitive goods, and what information should be exchanged to support future decisions.

If established, the Board could become an important mechanism for periodically revisiting tariff treatment as supply chains, economic conditions, and national security priorities evolve, rather than requiring entirely new tariff proceedings each time circumstances change.

Who Should Consider Filing Comments?

The universe of companies that should consider participating in this proceeding is considerably broader than those that previously sought Section 301 exclusions. Indeed, many businesses that concluded years ago that the Section 301 exclusion process offered little prospect of success may find that this proceeding presents a substantially different opportunity.

The most obvious candidates are companies currently benefiting from one of the relatively few remaining Section 301 product exclusions. Those businesses should strongly consider advocating that the products currently covered by those exclusions should continue to receive favorable tariff treatment under whatever framework ultimately emerges from the negotiations.

Likewise, companies whose prior exclusion requests were denied should not assume that those earlier decisions dictate the outcome here. This proceeding involves different legal standards and policy objectives; USTR is expressly seeking updated information regarding current supply chains, sourcing realities, and economic consequences of maintaining elevated tariffs. Companies that continue to source from China because commercially reasonable alternatives remain unavailable should carefully consider whether changed market conditions support a renewed request.

Manufacturers that rely on imported Chinese components or raw materials should also evaluate whether existing tariffs have increased the cost of U.S. production, discouraged domestic investment, reduced exports of U.S.-manufactured products, or otherwise made American manufacturing less competitive. This may be particularly true where tariffs have created “tariff inversions,” resulting in manufacturing inputs being subject to higher duties than the downstream finished products produced from those inputs. In those situations, reducing tariffs on imported inputs may strengthen rather than undermine domestic manufacturing.

Similarly, companies that have invested substantial resources attempting to diversify their supply chains may continue to rely on China for specialized manufacturing, unique production capabilities, tooling, customer-specific specifications, regulatory requirements, or quality considerations. Those companies should consider explaining to USTR why additional diversification is not commercially realistic, and why the products at issue do not present meaningful national security or supply chain concerns.

Companies that have largely absorbed the cost of tariffs rather than passing those costs through to customers should likewise evaluate whether tariff relief would materially improve their competitiveness, profitability, pricing flexibility, or ability to invest in U.S. operations. Businesses considering reshoring or expanding domestic manufacturing also may wish to explain how lower tariffs on imported manufacturing inputs could facilitate additional U.S. investment and employment.

Finally, U.S. exporters should consider submitting their input as well. USTR is seeking comments not only regarding which Chinese-origin products should receive lower U.S. tariffs, but also which U.S.-origin products should receive reciprocal tariff reductions by China. Companies exporting agricultural products, industrial goods, machinery, technology, or other products currently subject to elevated Chinese tariffs may find that improved access to the Chines markets will provide significant commercial benefits

In short, this proceeding is relevant to far more than traditional importers. Any company whose business is materially affected by tariffs on U.S.-China trade—whether as an importer, domestic manufacturer, exporter, or participant in an integrated global supply chain—should consider whether submitting comments could define a more favorable tariff framework going forward.

What Information Is USTR Seeking?

Unlike many prior tariff proceedings, USTR is not simply asking whether tariffs should be increased or decreased. Rather, it is attempting to determine which products are appropriate candidates for tariff liberalization as part of broader negotiations with China. To do so, USTR is seeking factual information that will help it evaluate both the strategic importance of particular products and the economic consequences of modifying existing tariffs.

The threshold question is whether a product should be considered “non-sensitive.” USTR defines non-sensitive products as those that present few, if any, concerns relating to national security, economic security, or supply chain resilience. Accordingly, companies should be prepared to explain why their products do not implicate those concerns and why reducing tariffs would be consistent with general U.S. trade and national security objectives.

Beyond that threshold determination, USTR is seeking to understand the practical effects of existing tariffs. For example, the agency is requesting information regarding products that remain subject to Section 301, Section 232, or other non-MFN tariffs and whether those tariffs have produced unintended economic consequences. One example is tariff inversions, where manufacturing inputs face higher duties than the downstream finished products produced from those inputs. USTR is also interested in understanding the extent to which the United States continues to rely on Chinese imports for particular products and whether commercially realistic alternative sources exist.

The Notice also places considerable emphasis on the extensive economic consequences of tariff modifications. USTR specifically requests information regarding how lower tariffs would affect U.S. manufacturers, workers, consumers, and supply chains. Consequently, companies should focus not only on how tariffs affect their own operations, but also on how tariff relief would influence domestic manufacturing, investment, employment, competitiveness, consumer spending, and downstream industries. The more clearly a company can demonstrate that reducing tariffs would strengthen the U.S. economy without creating meaningful national security concerns, the more persuasive its submission is likely to be.

Finally, USTR is evaluating the bilateral trading relationship as a whole, not merely U.S. imports. The agency is also seeking recommendations regarding U.S.-origin products that should receive reciprocal tariff reductions by China. Therefore, Companies with significant export operations should consider whether this proceeding presents an opportunity to advocate for improved access to the Chinese market as well as lower tariffs on imported products.

Throughout the Notice, one theme is clear: USTR is looking for evidence, not conclusions. Companies that support their comments with objective trade data, sourcing information, economic analysis, and concrete examples are likely to present considerably more persuasive submissions than those relying primarily on generalized policy arguments or assertions that tariffs simply increase costs.

What Types of Arguments Are Most Likely to Persuade USTR?

Although USTR retains broad discretion, both the Notice and prior tariff proceedings provide useful guidance regarding the types of arguments that are most likely to influence the agency’s analysis. Companies should remember that they are not simply requesting lower tariffs—they are helping USTR determine which products should become part of the United States’ negotiating position with China. Accordingly, the strongest submissions are likely to demonstrate not only why tariff relief benefits the commenting company, but also why it advances broader U.S. economic and trade policy objectives.

Some items to consider when drafting comments include the following:

• Begin by Explaining Why the Product Is Truly “Non-Sensitive.” The threshold issue in this proceeding is whether a product presents meaningful concerns relating to national security, economic security, or supply chain resilience. Companies should therefore directly address that question rather than assuming the answer is self-evident. Relevant considerations may include whether the product has little or no military or dual-use application, is widely available from multiple global sources, consists primarily of commodity materials or industrial inputs, or otherwise presents minimal strategic significance. The more directly a submission addresses USTR’s definition of a “non-sensitive” product, the more persuasive it is likely to be.
• Consider Arguments Regarding Why Continued Chinese Sourcing Reflects Commercial Reality. Many companies have spent years attempting to diversify their supply chains. In industries where Chinese sourcing nevertheless remains necessary, companies should explain why. Relevant considerations include capacity limitations outside China, customer specifications, regulatory approvals, tooling investments, quality requirements, intellectual property protections, and other commercial realities. These factors often provide persuasive explanations for why production cannot reasonably be relocated in the near term. Objective evidence supporting those circumstances will generally carry substantially greater weight than generalized assertions that alternative sourcing would simply be expensive or difficult.
• Demonstrate How Tariff Relief Would Strengthen U.S. Manufacturing. Perhaps the most compelling submissions will show that reducing tariffs would strengthen—not weaken—American manufacturing. For many products, tariffs increase the cost of manufacturing in the United States by raising the price of imported components, raw materials, or production equipment. Companies should explain whether tariff relief would reduce production costs, support additional domestic investment, improve export competitiveness, preserve or create U.S. jobs, or otherwise enhance the competitiveness of U.S.-based manufacturing operations. Framing tariff relief as a means of supporting American industry is likely to resonate more strongly than arguments focused solely on reducing import costs.
• Highlight Tariff Inversions and Other Unintended Consequences. USTR specifically requests information regarding tariff inversions, where manufacturing inputs are subject to higher duties than the downstream products manufactured from those inputs. Companies encountering these situations should carefully explain how the existing tariff structure discourages domestic manufacturing, distorts sourcing decisions, or otherwise produces outcomes that are inconsistent with the underlying objectives of the tariff program. Concrete examples of these unintended consequences may be particularly persuasive because they demonstrate how existing tariffs can sometimes undermine the very industries they were intended to protect.
• Support Every Assertion With Objective Evidence. Throughout the Notice, USTR repeatedly requests factual information rather than general policy views. Accordingly, companies should support their submissions with objective data whenever possible, including import volumes, duty payments, China’s share of the U.S. market, employment impacts, capital investments, downstream manufacturing supported by the imported products, export impacts, and other measurable economic effects. Whenever possible, companies should quantify the consequences of maintaining—or reducing—the current tariffs. Numbers almost always carry more weight than adjectives.
• Anticipate the Questions USTR Will Ask. The strongest submissions do not ignore the reasons the tariffs were imposed in the first place. Rather than simply asserting that tariffs are harmful, companies should explain why the specific products at issue do not present meaningful national security or supply chain concerns and why targeted tariff relief would remain fully consistent with broader U.S. trade policy objectives. Likewise, because this proceeding is intended to support bilateral negotiations, companies should explain why their proposed tariff modifications represent appropriate candidates for reciprocal concessions by China and would contribute to a more balanced and durable trading relationship.
• Do Not Assume Someone Else Will Make Your Case. Many industries are represented by trade associations that are likely to submit comments in this proceeding, which can provide valuable input when they provide industry-wide economic data, explain broader market dynamics, or advocate for tariff relief affecting an entire sector. But companies should not assume that an association’s comments eliminate the need for an individual submission, because your company may have unique points to make. Company-specific facts often cannot be presented effectively by an industry association, yet they may be among the most persuasive evidence in the record. Companies should therefore view association comments and company-specific submissions as complementary rather than mutually exclusive. An effective strategy may involve supporting an industry’s broader policy objectives through the association while simultaneously submitting company-specific comments explaining how those issues affect the business’ own operations, investments, employees, customers, and competitiveness.

Ultimately, USTR is likely to be influenced by both the breadth and the depth of the record before it. Trade associations often demonstrate the breadth of an issue across an industry, while individual companies frequently provide the detailed factual evidence that gives those broader arguments practical force.

Practical Steps Before the July 10 Deadline

Preparing a persuasive submission will often require considerably more than simply drafting a comment letter. Companies should view this proceeding as an opportunity to develop a comprehensive factual record establishing why tariff relief would advance broader U.S. economic interests. Accordingly, companies should consider taking the following steps before the July 10 deadline:

• Identify the products that matter most. Review products currently subject to Section 301, Section 232, or other non-MFN tariffs to determine which have the greatest commercial significance and would provide the greatest benefit if tariffs were reduced.
• Confirm the applicable tariff classifications. Because any eventual tariff modifications are likely to be tied to specific HTSUS provisions, companies should verify the tariff classifications for the products they intend to address and consider whether more detailed product descriptions are appropriate to distinguish their merchandise from other products classified under the same tariff provision.
• Evaluate whether the products qualify as “non-sensitive.” Carefully assess how each product fits within USTR’s definition of a non-sensitive product and identify the facts demonstrating that it presents minimal national security, economic security, or supply chain resilience concerns.
• Look for unintended consequences in the current tariff structure. Determine whether existing tariffs create tariff inversions, increase the cost of U.S. manufacturing, discourage domestic investment, reduce exports of U.S.-manufactured goods, or otherwise produce outcomes inconsistent with the objectives of the tariff program.
• Build an evidence-based record. Assemble objective information regarding import volumes, duty payments, sourcing alternatives, manufacturing operations, employment, capital investment, export activity, and other measurable economic impacts. The stronger the factual record, the more persuasive the submission is likely to be.
• Coordinate across the organization. Preparing an effective submission may require input from trade compliance, procurement, engineering, manufacturing, finance, government affairs, sales, and senior management. Companies should begin that coordination early enough to gather the information requested by USTR.
• Continue monitoring the proceeding after July 10. Initial comments are only the first stage of the process. Companies should consider reviewing comments submitted by others, particularly competitors, customers, suppliers, and domestic manufacturers, to determine whether rebuttal comments should be submitted before the July 27 deadline.

Key Takeaways

For nearly eight years, most companies have had little choice but to adapt to an evolving landscape of tariffs on imports from China. This proceeding represents a rare opportunity to move from simply reacting to tariff policy to helping shape it.

Although there is no assurance that USTR will ultimately reduce tariffs on any particular product, companies that fail to participate may miss an important opportunity to influence the factual record that will help define the United States’ negotiating priorities. Those priorities, in turn, may define the next generation of tariff treatment for billions of dollars in U.S.-China trade.

Accordingly, companies should not view this proceeding as merely another public comment exercise. Rather, it is an opportunity to explain why particular products should be treated differently, why tariff relief would advance broader U.S. economic interests, and why those products are appropriate candidates for inclusion in a future bilateral tariff agreement. Companies that present thoughtful, well-supported, and data-driven submissions will likely be best positioned to influence the next phase of the U.S.-China tariff framework.