Google Chrome OS 67.0.3369.0 (Official Build) canary (64-bit)
Firmware Version Google_Samus.6300.276.0

Steps to repro:
# Launch Files application
# Use linear navigation or tab to get to the folders under My Drive starting with the root of Google Drive
# Attempt to linear navigate to subfolders such as My Drive
Expected: focus lands on sub folder
Actual: if you are linear navigating, focus goes to the next top level folder, in this case, Downloads. If you try using just arrow keys, focus will hop to the menu icon or to the names of the folder. This would be ok if focus was consistent.
# With focus on any of the folders that can expand/collapse, attempt to collapse them with search + space or enter
Expected: folders expand and collapse
Actual: no change, no way to access the content in a folder if it is collapsed

workaround: once you shift focus into the file list, you can invoke one of the sub folders in that list  

Marking as a p2 since while the user is blocked from accessing sub folder content in the files view, there is a workaround.