In perhaps the clearest sign yet of Beijing’s growing concern over the economic repercussions of its trade conflict with Washington, China is reportedly considering exemptions for certain US imports currently subject to steep retaliatory tariffs.
Authorities are actively soliciting input from businesses to identify goods that could potentially bypass the hefty 125% duties imposed on American products.
Beijing solicits input amid tariff strain
According to a source familiar with the matter who spoke on condition of anonymity, a dedicated task force within China’s Ministry of Commerce is compiling lists of imported items that might qualify for tariff exemptions.
Crucially, this process involves directly asking companies to submit their own requests, suggesting a targeted approach to alleviating specific economic pressures.
This development follows reports indicating potential areas of focus.
The financial news magazine Caijing reported on Friday, citing sources, that Beijing was preparing to include eight specific semiconductor-related items in an exemption list, although notably excluding memory chips.
Furthermore, a separate, unverified list detailing 131 broader categories of products – ranging from vaccines and chemicals to sophisticated items like jet engines – was circulating widely among businesses and trade groups on Friday.
However, Reuters could not independently verify the authenticity or status of this circulating list.
Official channels remained silent on the matter. Repeated attempts to reach China’s customs department by phone were unsuccessful, and neither customs nor the Ministry of Commerce immediately responded to faxed inquiries from Reuters seeking comment.
Bloomberg first reported on China considering the tariff exemptions earlier on Friday.
A shift driven by economic concerns?
This potential policy adjustment suggests a significant degree of worry within Beijing about the economic strain caused by the decoupling of the world’s two largest economies.
The move mirrors similar actions taken by Washington, which recently offered tariff exemptions for certain electronic goods imported from China, acknowledging the potential harm to its own economy.
China’s consideration of exemptions contrasts sharply with its official rhetoric, which has consistently maintained a willingness to “fight to the end” unless the US completely lifts its tariffs.
However, beneath the surface of these strong public declarations, the Chinese economy is facing considerable headwinds as it navigates the trade war.
Domestic demand remains weak, consumer spending and sentiment have struggled to fully recover to pre-pandemic levels, and the economy is showing signs flirting with deflationary pressures.
The government has encouraged exporters hit hard by tariffs to pivot towards selling within the domestic market.
However, companies undertaking this shift report significant challenges, including lower profit margins, weaker demand compared to export markets, and less reliable customer bases.
Granting targeted tariff exemptions represents a more direct form of support for affected industries and supply chains.
Dual impact: easing pain on both sides
While primarily aimed at mitigating domestic economic strain, allowing some US imports to enter without punitive tariffs could inadvertently lessen the economic pressure on the United States as well.
By permitting certain trade flows to resume more normally, these exemptions could take some pressure off the White House, even as the broader trade conflict continues.
The move underscores the complex interplay of domestic economic realities and geopolitical posturing in the ongoing US-China trade saga.
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