China quietly exempts some US-made products from tariffs
China's government has exempted some US imports that the country would struggle to immediately source from elsewhere from its retaliatory tariffs, people familiar with the matter said.
Chinese authorities have told some importers of American goods that they would waive the most recent 125 per cent increases in tariff rates for certain US imports. Those products include certain semiconductors and chip-making equipment, medical products and aviation parts, the people said.
The carve-outs highlight points of vulnerability for China's economy. Many Chinese industries, particularly in advanced technology, aerospace and pharmaceuticals, remain reliant on American-made inputs.
The Trump administration, similarly, announced exemptions on its 'reciprocal tariffs' for China-made smartphones, laptops and other electronics earlier this month, a recognition of the US's reliance on China for such goods.
When Trump levelled a cumulative 20 per cent in additional levies on all Chinese imports early on in his second term, Beijing responded with targeted tariffs on some US imports, including energy products and certain vehicles. It didn't slap across-the-board tariffs on US goods until Trump's 'Liberation Day' tariffs on April 2, which applied an additional 34 per cent on all Chinese goods. After that, Beijing matched each of Trump's subsequent tariff increases, bringing its current tariff level to 125 per cent on all US goods.
Two semiconductor traders said Chinese customs had lifted tariffs on eight categories of US-made chips, including central-processing units, starting on April 24. Chinese authorities haven't removed tariffs on US memory chips, they said.
Many chip products developed by Intel and Texas Instruments are exempt from the tariffs, while some US-made products of memory-chip maker Micron Technology will continue to be subject to the duties, they said.
Beijing has prepared a list of US imports from which it plans to remove the tariffs, some of the people said. The goods being considered also include some industrial chemicals such as quartz and ethane, as well as lithography machines, helicopters and vaccines, they said. They cautioned that the list could change as discussions proceed.
As the tariff war between Washington and Beijing has escalated, Chinese officials have been surveying companies and industry groups to understand what US goods should be exempted from tariffs to protect China's own interests, the people said. Still, Beijing has refrained from publicly announcing its tariff exemptions so as not to reveal its structural vulnerabilities while also leaving space for future adjustment and negotiation, one of the people said.
The Chinese effort has involved several government bodies, with co-ordination overseen by the Customs Tariff Commission of the State Council, the country's cabinet.
'They want to make sure the Chinese tariffs don't harm their economy,' said Michael Hart, president of the American Chamber of Commerce in China, whose members include Boeing, Honeywell and Qualcomm. Hart said Beijing had been asking US firms doing business in China what components they import from America that they can't get elsewhere.
Hart said that pharmaceutical companies were reporting anecdotally that some of their shipments to China were also exempted from the 125 per cent levies on all US goods.
'China still has the 125 per cent tariffs in place, but appears to be making specific exemptions for products that are critical for them and their economy,' Hart said. 'Assuming we have understood this correctly, it tells us China is clearly mapping and managing their supply chain to keep out US products that have other substitutes, but allowing in those they need and can't replace at present.'
China's aviation regulator has instructed some airlines to halt receiving aircraft and components from the US The exemption on aircraft parts, such as engines, will allow the country to continue with aircraft maintenance and manufacturing. China has a homegrown plane maker, Comac, that remains reliant on foreign supply chains.
In recent weeks, at least three Boeing aircraft set to be delivered to China's Xiamen Airlines and Air China have flown back to the US Chinese officials are also weighing whether to waive tariffs for Chinese carriers that lease jets from the US, one of the people said.
Olivier Andries, chief executive of Safran, a French aerospace-industry supplier, told analysts on an earnings call Friday that China was exempting tariffs on deliveries of engines, landing gear and other parts.
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