By David Lawder
WASHINGTON, May 13 (Reuters) - The U.S. and China are expected to inch toward a managed trade mechanism for non-sensitive goods this week, with each side possibly identifying some $30 billion worth of goods on which they could reduce tariffs and sell to each other without crossing national security red lines.
The so-called "Board of Trade" was first broached by U.S. Trade Representative Jamieson Greer in March as a key "deliverable" agreement for this week's high-stakes summit between
U.S. President Donald Trump and Chinese President Xi Jinping.
The contours of the plan remain sketchy, but a key shift from past dialogues is clear: Washington is no longer demanding that Beijing change its state-directed, export-driven economic model to become more like the U.S. consumer-driven, market-oriented model.
Instead, the effort is focused on numerical trading targets in non-strategic sectors while keeping in place broad tariffs and export controls on national security-sensitive technologies.
GREER'S 'ADAPTER' APPROACH
"It's not really a situation where we go and get China to change the way they govern, the way they manage their economy," Greer told Fox Business Network last week. "That's all baked into their system, but I think there is a world where we find out where can we optimize trade between China and the United States to achieve more balance."
He likened the mechanism to a plug "adapter" that can help connect two incompatible economic systems.
U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng met on Wednesday for three hours in Incheon, South Korea to lay final groundwork on economic proposals for Trump and Xi to discuss in Beijing. But the two top economic officials did not issue any statements about their preliminary meeting.
Four people familiar with the Trump administration's objectives said they expected a $30 billion-for-$30 billion trade-barrier reduction framework arrangement to launch the new mechanism. But it's unclear whether any specific goods will be defined by Trump and Xi or if that will be achieved in subsequent meetings.
Wendy Cutler, a former USTR negotiator who heads the Asia Society Policy Center in Washington, said both sides "are coalescing around" a $30 to $50 billion basket of goods for reduced tariffs or other barriers.
"The non-sensitive basket is just such a small part now of our overall trade with China. So maybe this Board of Trade, maybe it starts with that" and expands in the future, Cutler told a virtual Asia Society forum on Tuesday.
U.S.-China two-way goods trade shrank by 29% to $415 billion from $582 billion in 2024, with the U.S. trade deficit falling nearly 32% to $202 billion in 2025, its lowest in two decades, according to U.S. Census Bureau data.
The U.S. Trade Representative's office and the U.S. Treasury declined to comment further on the proposed mechanism ahead of the Beijing summit.
China has refrained from using the Board of Trade moniker, and said in March the two sides had "agreed to explore the establishment of working mechanisms to expand economic and trade cooperation" with no further details.
ENERGY, AGRICULTURE IN FOCUS
With the U.S. aiming to increase sales of energy and agricultural products to China, Beijing's disruptive tariffs on these commodities are one possibility.
China maintains a general extra 10% tariff on all U.S. imports, matching the current 10% U.S. temporary tariff on Chinese goods.
In addition to this and pre-existing "most favored nation" tariffs, Beijing imposes retaliatory duties on imports from the U.S. of 10% on crude oil, 15% on liquefied natural gas, 15% on coal and up to 55% on beef.
The U.S. maintains tariffs of 7.5% on a raft of Chinese consumer products imposed in 2019 at the height of Trump's first-term trade war with China. These include flat-panel television sets, flash memory devices, smart speakers, Bluetooth headphones, bed linens and multifunction printers and many types of footwear. The 10% temporary global U.S. tariff, set to expire in July, stacks on top of these duties.
The U.S. also could resurrect some of the more than 2,200 product-specific exclusions from the China tariffs granted during Trump's first term but which have since largely expired.
Trump in November 2025 extended for one year temporary tariff exclusions on solar product manufacturing equipment and 164 categories of industrial and medical products from printed circuit boards to electric motors and blood pressure monitoring equipment. Some of these could be made permanent.
BOARD OF INVESTMENT
The two sides are also expected to discuss the less-developed concept of a "Board of Investment" to deal with investment issues, but Greer told the Hudson Institute last month: "I don't think we're at the point in our relationship with the Chinese where we want to talk about big investment programs either way."
U.S. lawmakers, automotive, steel and tech groups have warned Trump against any deal that opens the door to Chinese investment in the U.S. vehicle sector, arguing that this would hollow out the core of U.S. manufacturing.
(Reporting by David Lawder; Editing by Lincoln Feast.)
