In This Issue:
• USTR Opens Comments Ahead of Next USMCA Review
• Trade Court Examines Section 301 Forced-Labor Tariffs
• Treasury and IRS Outline Manufacturing Tax Guidance Priorities
• Lawmakers Renew Push to Restrict Chinese Connected Vehicles
• EPA TCE Compliance Extensions Under Review at OMB
USTR Opens Comments Ahead of Next USMCA Review
The Office of the U.S. Trade Representative (USTR) announced October 2, 2026, that it is seeking public comments ahead of the 2027 annual review of the U.S.–Mexico–Canada Agreement (USMCA). Written comments and requests to participate in a public hearing are due January 12, 2027. USTR will announce the hearing’s date and location separately.
The consultation follows the first joint review on July 1, 2026, when the United States declined to extend the agreement for a new 16-year term. While Canada and Mexico sought the extension, the U.S. decision did not terminate USMCA. The parties no review the agreements provisions annually meetings until all three countries agree to an extension or its current term expires in July 2036. Talks between the sides likely will continue into 2027 on many of the more contentious issues.
USTR is requesting comments on implementation, compliance, recommended changes, and factors affecting investment and competitiveness in North America. The agency also seeks recommendations on cooperation to address other countries’ non-market policies and practices. Topics stakeholders likely will raise include how rules of origin, customs procedures and cross-border supply arrangements affect production and investment decisions, with the automotive sector receiving particular focus.
Trade Court Examines Section 301 Forced-Labor Tariffs
The U.S. Court of International Trade (CIT) heard arguments September 30, 2026, in consolidated challenges to Section 301 tariffs covering imports from 60 trading partners, totaling 86 countries. The judges questioned whether the administration adequately supported its findings and complied with the statute’s requirements. The government defended its investigations, while plaintiffs sought to have the tariffs set aside.
The litigation concerns the administration’s use of Section 301 of the Trade Act of 1974 to respond to foreign governments’ alleged failures to prevent imports of goods produced with forced labor. Section 301 authorizes action against specified foreign practices that burden or restrict U.S. commerce.
Plaintiffs contend that USTR did not establish the necessary country-specific findings or adequately connect the identified practices to its broad tariff response. Their argument disputes the scope of the tariff authority rather than the importance of combating forced labor. They maintain that the statute requires a targeted, reasoned response to identified foreign practices.
While the CIT may issue a ruling on an expedited timeline, the judges have not indicated a timeline for a decision on the Section 301 forced labor tariffs. USTR has yet to release its decision on the Section 301 excess manufacturing capacity tariff investigation as many are looking to the forced labor court case in anticipation of future legal challenges to a manufacturing excess capacity 301 tariff.
Treasury and IRS Outline Manufacturing Tax Guidance Priorities
The Treasury Department and Internal Revenue Service (IRS) released their 2026–2027 Priority Guidance Plan on September 29, 2026, identifying 121 projects for the fiscal year ending September 30, 2027. Priorities include implementing recent tax legislation and reducing administrative burdens.
Several items listed in the plan directly concern manufacturing investment. Treasury plans regulations under Section 168(k) addressing bonus depreciation for qualifying machinery and equipment and under Section 168(n) addressing the special depreciation allowance for qualifying production property, including certain manufacturing facilities. The plan also includes regulations and guidance on research and experimental expenditures under Sections 174 and 174A, regulations on the business-interest deduction limitation under Section 163(j), and regulations implementing changes to the qualified business income deduction for pass-through businesses under Section 199A.
Other projects address the research tax credit under Section 41, simplification of inventory capitalization regulations under Section 263A, and updated procedures for the rolling-average-cost inventory valuation method under Section 471. IRS also plans revised procedures for automatic and nonautomatic accounting-method changes under Section 446. These projects could affect how manufacturers calculate taxable income, substantiate credits and deductions, and implement changes to their tax accounting practices.
Planned employer guidance includes regulations implementing enhancements to the employer-provided child-care credit under Section 45F and guidance on the paid family and medical leave credit under Section 45S.
The plan identifies guidance priorities rather than establishing new taxpayer obligations or deadlines for completing individual projects. Treasury and IRS expect to update the plan during the year and invite additional public recommendations.
Lawmakers Renew Push to Restrict Chinese Connected Vehicles
Senators Bernie Moreno (R-OH) and Elissa Slotkin (D-MI) renewed their push for the Connected Vehicle Security Act during Senate floor remarks September 24, 2026. The bipartisan legislation advanced unanimously from the Senate Commerce Committee on July 22. The bill would establish restrictions aimed at protecting vehicle data and the domestic automotive industry.
The legislation would restrict the importation, manufacture and sale of connected vehicles and covered technology linked to China or other foreign adversaries. It targets vehicles, software and hardware associated with those countries, including certain joint ventures and controlled entities, and would authorize the Department of Commerce to block high-risk technologies and transactions.
Commerce already regulates certain connected vehicle hardware and software linked to China or Russia. The legislation would put restrictions into federal law, making them more difficult for future administrations to reverse. Supporters cite both the risk that vehicle systems could collect or transmit sensitive information and the competitive threat from subsidized Chinese automotive production.
The legislation must still pass the full Senate and House, with both chambers approving identical language before it can reach the president. Moreno has said he expects the House version, sponsored by China Select Committee Chair John Moolenaar (R-MI) and Rep. Debbie Dingell (D-MI), to move soon after the House returns from its election recess in November. Supporters are targeting final passage during the post-election lame-duck session, although Moreno has emphasized that aligning the House and Senate versions remains a key challenge given the limited legislative calendar. If Congress does not complete action before its term ends in January 2027, the legislation would require reintroduction in the next Congress.
EPA TCE Compliance Extensions Under Review at OMB
The White House Office of Management and Budget’s (OMB) Office of Information and Regulatory Affairs (OIRA) is currently reviewing a proposal to extend certain compliance dates under the Environmental Protection Agency’s (EPA) trichloroethylene (TCE) regulation. OIRA review is the final interagency stage before an agency releases a proposed rule for public comment. OIRA received the proposal, titled “Trichloroethylene (TCE); Regulation under the Toxic Substances Control Act (TSCA); Additional Compliance Date Extensions,” on September 30, 2026.
The rulemaking would address compliance deadlines established under EPA’s December 2024 TCE risk-management rule. TCE serves as a solvent in industrial and commercial processes, including metal cleaning and degreasing. The Biden-era rule prohibited most uses of the chemical and established separate transition periods and worker-protection requirements for certain uses allowed to continue.
EPA has already adjusted portions of the implementation schedule. In September 2025, the agency extended the compliance date for TCE used as a processing aid in nuclear fuel manufacturing to September 15, 2028, citing national security and energy considerations. It also extended the deadline for certain wastewater disposal activities to December 18, 2026.
The latest proposal signals that EPA is considering additional transition time, however, EPA has not released its details publicly. The OIRA listing does not identify which uses or deadlines the proposal would affect.
Once OMB completes its review, EPA may publish a proposed rule outlining the extensions under consideration and open a public comment period before finalizing any changes. EPA has not announced a publication date. A 90-day limit generally applies to OIRA review, although OMB may extend that period.