China grants some exemptions from US tariffs to limit trade war pain

Highlights:

• China considers exempting some US imports from 125% tariffs
• Beijing seeks to mitigate economic fallout from trade war
• Some recent imports from US have not been subject to tariffs, AmChan says, citing members

China has granted some exemptions on US imports from its 125% tariffs and is asking businesses to identify goods that could be eligible in the clearest sign yet that Beijing is worried about the economic fallout from its trade war with Washington, according to businesses notified.

The dispensation is the latest sign that the world's two largest economies were prepared to rein in their trade war, assuaging concerns about the impact of the tariffs.

Beijing's possible consideration of wider tariff exemptions for dozens of industries follows a shift in tone from Washington, pushing the US dollar up slightly and lifting equity markets in Hong Kong and Japan.

A Ministry of Commerce taskforce is collecting lists of items that could be exempted from tariffs and is asking companies to submit their own requests, according to a person with knowledge of that outreach.

"The Chinese government, for example, has been asking our companies what sort of things are you importing to China from the US that you cannot find anywhere else, and so would shut down your supply chain," American Chamber of Commerce in China President Michael Hart said on Friday.

Some companies represented by the US business group have reported that they had imported goods in the past week without the new tariffs being applied, Hart said.

The chief executive of French aircraft engine maker Safran (SAF.PA) said on Friday it had been informed last night that China had granted tariff exemptions on "a certain number of aerospace equipment parts," including engines and landing gear.

China's Commerce Ministry said on Thursday it had held a meeting with more than 80 foreign companies and business chambers in China to discuss the impact of US tariffs on investment and the operation of foreign firms in the country.

The tariff exemptions under consideration by Beijing would provide cost relief for companies in China, from drug makers to airlines, and allow for less expensive imports of everything from semiconductors to petrochemicals. It could also take pressure off US exports at a time when the Trump administration has shown signs of wanting to make a deal with Beijing.

The European Union Chamber of Commerce in China also said it had raised the issue of tariff exemptions with the commerce ministry and was awaiting a response.

"Many of our member companies are significantly impacted by the tariffs on critical components imported from the US," President Jens Eskelund said.

A list of 131 categories of products said to be under consideration for tariff exemptions was circulating on Chinese social media platforms and among businesses and trade groups on Friday. Reuters could not verify the list, which included items ranging from vaccines and chemicals to jet engines.

Huatai Securities said the list corresponded to $45 billion worth of imports to China last year.

China's customs agency and the Ministry of Commerce did not reply to requests for comment.

While Washington has said the trade stand-off with China is economically untenable and already offered tariff exemptions to some electronic goods, China has repeatedly said it is willing to fight to the end unless the US lifts its 145% tariffs.

But China's economy headed into the trade war with rising unemployment, deflationary pressures and heightened concern that a mounting backlog of unsold exports could drive domestic prices even lower.

While China ran a nearly $1 trillion trade surplus in 2024, it also relies on the United States for key imports, including ethane, a petrochemical needed to make plastics, and some drugs.

Big pharmaceutical companies, including AstraZeneca (AZN.L) and GSK (GSK.L), have at least one manufacturing site in the US for drugs sold in China, according to Chinese government data.

Major ethane processors have already sought tariff waivers from Beijing because the US is the only supplier.