China has exempted some goods imported from the United States from its 125% tariffs.
Beijing also asked domestic companies to identify critical products they need levy-free. The relevant information was published by the media with reference to businesses, which received the mentioned notifications from the Chinese authorities.
Mitigating decisions regarding shipments of products from the United States can be interpreted as an unambiguous signal that China is concerned about the likely consequences of a trade war with Washington. The Asian country has a powerful industrial base, the second-largest economy in the world, a huge market, and a developed technology sector, but the condition of complete autonomy, meaning invulnerability to external factors, is still not a characteristic reflecting the reality that which Beijing is immersed. It is possible that the exemptions from tariffs on goods imported from the United States are a kind of prologue to concluding a trade deal with Washington.
It is worth noting that the US also hints at a softening of the confrontation with China in the economic plane. Recently, Washington has made several statements about the de-escalation of corresponding tensions. At the current week, the President of the United States, Donald Trump, said that levies against China would be reduced if Beijing and Washington could reach an appropriate agreement. He also stated his intention to be very nice in any negotiations with the Asian country. This means that both of the world’s largest economies are ready to move closer to the issue of regulating the terms of trade cooperation. It is worth noting that for the United States, the tariff confrontation also generates various risks, the main of which is a rapid increase in inflation. Moreover, according to media reports, tensions between Beijing and Washington could trigger a global recession.
The exceptions, which were decided by China, pushed the US dollar up. Also within the framework of this information background were lifted equity markets in Japan and Hong Kong. According to media reports, business groups hope that the exemptions from import duties will affect dozens of industries.
Alfredo Montufar-Helu, a senior adviser to the Conference Board’s China Center, a think tank, said that the mentioned Asian country’s measures as a quid-pro-quo move could provide a potential way to de-escalate tensions. At the same time, the expert warned that neither Beijing nor Washington wants to be the first to reach out for a deal.
It is also worth noting separately that the Chinese authorities have not yet officially announced any exemptions regarding imported shipped products from the United States.
Donald Trump, during a conversation with media representatives, said that negotiations on tariffs were already underway between Beijing and Washington. He also claims that the head of the People’s Republic of China, Xi Jinping, called him. At the same time, Beijing has so far disputed how Washington interprets the interim results of moving towards a full-fledged negotiation process to conclude the deal.
Donald Trump, during a conversation with media representatives, noted that, in his opinion, Xi Jinping’s call was not a sign of weakness on the part of the Chinese leader. Mr. Trump did not specify exactly when the phone conversation took place or what topics were discussed.
Equity markets mostly did not respond to the mentioned statements by the President of the United States. European stocks remained in positive territory. At the same time, US stock futures failed to hold early gains and were last little changed on the day.
It is worth noting that on Friday, April 25, the Chinese Politburo issued a statement that focused on efforts to maintain stability in the Asian country by supporting companies and workers most affected by tariffs. According to media reports, this statement probably indicates that Beijing continues to be prepared for a trade war of attrition. Exemptions to tariffs on goods imported from the United States do not negate this sentiment. In a symbolic sense, Beijing is ready to plunge into the autonomy of existence, including in technological and economic dimensions, to survive Washington following the current escalation, which is currently an objectively occurring situation with a high level of uncertainty regarding the future prospects of the observed order of things.
The media, citing an anonymous insider, released information according to which the Chinese Ministry of Commerce taskforce is collecting lists of items that may be exempted from tariffs and is asking companies to submit their own requests. This week, the mentioned ministry stated that it held a meeting with more than 80 foreign firms and business chambers in the Asian Country to discuss the impact of US duties on investments and activities of overseas brands.
American Chamber of Commerce in China President Michael Hart said that the Asian country government, for example, has been asking companies what sort of things are they importing to China from the US that they cannot find anywhere else and so would shut down their supply chain. It was also noted that some member pharmaceutical firms had reported being able to import drugs to the Asian country without tariffs. Michael Hart believes that the exemptions relate only to specific drugs, and not to the entire industry.
The chief executive of French aircraft engine maker Safran said on Friday that it had been informed the previous night that Beijing had granted tariff exemptions for a certain number of aerospace equipment parts, including engines and landing gear.
A source at a memory chip design company told the media that the China Semiconductor Industry Association (CSIA) informed them this week of waivers on imports of eight types of microchips. In that case, the exemptions apply to analogue microcircuits, but not to memory chips. The insider used the right of anonymity due to the sensitivity of the issue. The mentioned measures are likely to have an impact on Micron Technology, the largest US manufacturer of memory chips.
The CSIA, in response to a media request for comment on the mentioned information, stated that it was a matter for customs. Micron Technology also did not respond to a corresponding request.
The tariff exemptions that Beijing is currently considering could provide cost relief for Chinese companies and ease pressure on US exports. These actions may be beneficial in the context of a potential trade deal with Washington. The administration of Donald Trump, which is showing signs of striving for the mentioned deal, is likely to positively assess the specified moves from Beijing.
The European Union Chamber of Commerce in China also stated that it had raised the issue of tariff exemptions with the commerce ministry and was awaiting a response.
On Friday, a list of 131 product categories that are tentatively claimed to be under consideration for levies exemptions began circulating on Chinese social media platforms and among some businesses and trade groups. The media was unable to verify this list, which, among other things, included vaccines, chemicals, jet engines, and eight types of chips.
Chinese company Huatai Securities said that the mentioned list corresponds to the $45 billion worth of imports to the Asian country last year.
China’s customs agency and commerce ministry did not respond to a media request for comment on the specified information. The Asian country’s foreign ministry said it was not familiar with tariff exemption plans.
Washington has stated that a trade stand-off with Beijing is economically untenable and has already offered levies exemptions on some electronic goods. At the same time, China has repeatedly emphasized its willingness to fight to the end in the framework of the trade war at the level of official political rhetoric. In the context of the relevant statements, it was noted that, in Beijing’s understanding, the situation would be finally resolved when Washington lifted its 145% tariffs on the Asian country.
China’s economic system is strong, but at the same time it is facing several challenges, the most sensitive of which are rising unemployment, ongoing deflationary pressures, sluggish domestic consumer activity, a prolonged crisis in the real estate sector, and falling investor confidence. Moreover, there is currently an intensification of concerns that a mounting backlog of unsold exports could drive prices in the Asian country even lower.
Last year, China recorded a trillion-dollar trade surplus. The Asian country’s economy relies heavily on exports, for which the trade war is an unambiguous negative environment. According to Statista, last year the share of external shipments of products in the structure of China’s gross domestic product (GDP) was approximately 18.9%. The total Chinese merchandise export in 2024 reached about 25.5 trillion yuan ($3.5 trillion).
The Asian country also relies heavily on the United States to import products such as petrochemical ethane, which is needed for the manufacturing of plastics and some drugs. The media reported that the largest ethane processors have already sought tariff waivers from Beijing since the US is the only supplier in this case.
