Did you know there was a trade classification for magic tricks?
Neither did Josh Teitelbaum, senior counsel at Akin Gump Strauss Hauer & Feld, until he reviewed the U.S. list of so-called non-sensitive Chinese goods that could be spared from forthcoming tariffs following last week’s Washington summit between President Donald Trump and Chinese President Xi Jinping. Other notable items on that list: Fireworks, billiard balls, Christmas ornaments and fishing lines.
This wasn’t the outcome Teitelbaum had hoped for, he said at Sourcing Journal’s annual fall Sourcing Summit in New York City on Tuesday. Calling the extension of the U.S.-China trade truce “less than meets the eye,” Teitelbaum had expected the list to include meaningful reductions in tariffs on apparel and footwear. Instead, the anticipated meeting between the two leaders appeared to have yielded little more than an extension of the Busan compromise reached last October, keeping baseline tariffs at 20 percent and pausing new retaliatory duties, including those tied to broader excess-capacity investigations, through January.
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Coupled with a slew of trade restrictions and sanctions targeting U.S. trading partners—including, unexpectedly, Canada—as well as only short-term renewals of the African Growth and Opportunity Act and Haiti’s HELP and HOPE Acts, the limited U.S.-China thaw seemed like a magic trick in itself, he said.
“What we learned yesterday was just the list of goods,” Teitelbaum said. “They did not say they plan to cut the tariffs. They did not say when they were going to cut the tariffs. They didn’t say which tariffs might be affected. They said, ‘Here’s the list of goods with which we hope to optimize trade.’”
But ask Teitelbaum whether anything had fundamentally changed in the U.S. relationship with China, and his answer would be “ultimately, no.” America’s dependence on Chinese critical minerals and rare earths, he noted, gives Beijing too much strategic leverage over the U.S. manufacturing ecosystem.
Stephen Lamar, president and CEO of the American Apparel & Footwear Association, who joined Teitelbaum on stage, agreed. Rather than the relationship reset many had sought, Lamar said the summit merely reset the clock. He described Washington’s current diplomatic approach as maintaining “constructive strategic stability,” adding that it was still preferable for the two sides to remain engaged.
“It’s better when they’re talking than when they’re not talking, and they’re going to be talking two more times,” he said.
Still, Lamar argued that “truce” is a misleading description.
“There is, in my opinion, not a truce,” he said. “We are still imposing tariffs. They’re still imposing tariffs in return. There’s a lot of shin-kicking under the table. The Chinese continue to harass U.S. companies. They have just added entities to their list, while the United States continues adding entities to its own unreliable-entities list, and so forth. The end result is not that things have stopped happening; they just haven’t gotten much worse.”
What has become surprisingly contentious, Lamar said, is the United States’ relationship with Canada, long regarded as one of America’s most stable and integrated trading partners.
While much of it may seem like trade pageantry, 50 percent tariffs on certain Canadian goods and outright bans on others are raising fresh questions about the future of free trade in North America, he said—particularly if even goods qualifying for preferential treatment under the U.S.-Mexico-Canada Agreement can no longer enter the United States duty-free.
Teitelbaum said the change is especially unusual because the administration had previously preserved a USMCA exemption through its drumbeat of tariff actions. Goods qualifying under the agreement were exempt from tariffs imposed under the International Emergency Economic Powers Act, then under Section 122 of the Trade Act of 1974—which replaced the IEEPA measure after the Supreme Court struck it down—and later under the Section 301 action targeting forced-labor imports, which replaced the Section 122 tariff after it reached its 150-day statutory limit.
“Now we got to the Section 338 tariff in August, and the USMCA exemption is gone,” he said. “That could mark the beginning of a new era in North American trade, where even USMCA-qualifying goods may no longer enter the United States duty-free.”
While Teitelbaum expects the Section 338 tariff to come off at some point, likely in 2027, the Trump administration‘s next tariff mechanism could center on excess capacity.
“Canada is not subject to excess capacity; Mexico is,” he said. “And we should not be surprised if, at the end of the USMCA review process, USMCA-qualifying goods from Mexico are subject to an additional tariff tied to excess capacity. If the Canadian goal is that all goods entering the U.S. that qualify under USMCA enter duty-free, that may not be realistic with this administration. That’s where I think this signals a new era in trade policy.”
While Teitelbaum said he was surprised that the Section 301 tariffs tied to excess capacity have yet to take effect, he suggested lawsuits challenging the forced-labor tariff as a pretext for replacing the Section 122 measure may be contributing to the delay. The United States may be taking its time to review those challenges and ensure any excess-capacity tariff can withstand the same scrutiny, he said.
The analytical burden is also greater, Teitelbaum said. The forced-labor measure turned largely on a binary question: whether another country prohibited imports made with forced labor. Because excess capacity is a newer concept for U.S. trade officials, it requires a more individualized, country-by-country analysis, he said.
“And then at some point, I think political considerations tip over—nobody has to say this publicly or even privately, but I think we’re all asking the same question: Is the president going to put on a 7.5 percent or 10 percent tariff four weeks before the midterm elections?” Teitelbaum said. “We’ll find out in four weeks.”
But if there’s one thing Lamar “didn’t have on [his] bingo card,” it was Congress granting the president sweeping new authority to impose tariffs through the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026. With businesses already challenging earlier presidential tariffs in court, however, he said the White House will likely try to “color inside the lines” and carefully justify how it applies the new authority, which allows tariffs of up to 100 percent on countries buying Russian energy, such as China or India.
Since the law includes a strict 30-day requirement following enactment, Trump is required to make initial determinations and publish the official lists of affected countries and non-sensitive goods by Oct. 18.
“There are a lot of questions about what that will end up looking like: Which countries? What’s the process for selecting the countries?” Lamar said. “There’s a million questions that come out, which is, again, one of the reasons why so many people in the business community did not want Congress to grant brand-new tariff authority to the president. Something’s coming. Wish I could tell you exactly what it would look like and when.”
And therein lay the problem: uncertainty. Even landmark trade-preference programs such as AGOA and Haiti’s HELP and HOPE Acts, renewed in September through December 2028 following a previous lapse in coverage, do not provide “enough runway,” as Lamar put it, to give industry the predictability it needs to make long-term sourcing and investment decisions.
“Had they in 2000 enacted a 26-year-long program, we would see a lot more textile investment in Africa,” Lamar said. “But they’ve done little dribs and drabs and extensions and tweaking. The only time we really saw something consistent was in 2015 when they did a straight 10-year renewal, and a lot of people responded to it. If we can get something longer, then I think all the things the policymakers say they want—more use, greater investment, more vertical integration—would begin to occur.”
Would a potential “blue wave” in the midterm elections change things? Teitelbaum suggested it could, though trade policy would remain largely executive-driven. A Democratic takeover of either chamber could bring tougher congressional oversight, with lawmakers ramping up investigations of private companies—which lack the White House’s executive privilege—to determine whether they sought special tariff treatment, made political contributions in connection with tariff requests or passed tariff refunds on to consumers.
A shift in power, he added, could also spur Democrats on key committees, particularly Ways and Means, to seek reforms to—or the repeal of—sweeping presidential trade authorities such as Sections 122, 301 and 338.
“Do I expect the president to sign that law?” he said. “I do not. But it does shape the Democratic debate in 2028: What will the trade policy of a Democratic nominee who may win that election look like?”
