China Eases Tariffs on Selected U.S. Imports

In a significant move aimed at reducing trade tensions with the United States, China has announced that certain imports from the U.S. will be exempt from the recently increased tariff rate of 125 percent. This decision was confirmed by companies impacted by the tariffs, who communicated the news to Reuters on Friday. The Chinese Ministry of Commerce is currently compiling a list of goods that may qualify for these exemptions, although no official statement has been released from the government in Beijing regarding the specifics.

During a press conference, Guo Jiakun, spokesperson for the Foreign Ministry, stated he had no precise information regarding the tariff exemptions and reiterated that there are no ongoing consultations or negotiations between China and the U.S. concerning the current trade conflict. However, the American Chamber of Commerce in China provided more insight, revealing that the Chinese government has been inquiring about specific U.S. products that are essential to their supply chains and cannot be sourced elsewhere. For instance, several companies within the pharmaceutical sector were able to import goods last week without the application of the new tariffs.

A list circulated on social media and among businesses and trade associations included 131 product categories potentially eligible for tariff exemptions, ranging from vaccines and chemicals to jet engines. Although Reuters could not independently verify this list, Huatai Securities estimated that the import groups represented a monetary value of approximately $45 billion in the previous year.

The aerospace supplier Safran, which collaborates with U.S. firm GE Aerospace to manufacture engines for aircraft manufacturers including Boeing and Airbus, acknowledged that China has granted tariff exemptions for specific aircraft components. Safran's CEO noted that the decision reflects the dynamic nature of the current situation.

The European Union Chamber of Commerce in China has also raised the issue of tariff exemptions with the Ministry of Commerce, highlighting that many of its member companies are significantly impacted by the tariffs on critical components sourced from the U.S. The chamber is awaiting a response from the ministry on this matter.

In an effort to support domestic companies and workers adversely affected by the high tariffs imposed by the U.S., the Chinese government has pledged to stabilize employment, businesses, markets, and public expectations. According to the state-run news agency Xinhua, the Politburo has indicated that various measures will be taken to assist struggling companies. As part of these initiatives, the government intends to increase the share of unemployment insurance funds that can be reimbursed to companies heavily impacted by tariffs. Additionally, adjustments to interest rates and the reserve ratio for banks are expected to be implemented in a timely manner.

Despite these developments, Zhiwei Zhang, chief economist at Pinpoint Asset Management, noted that there seems to be no urgent need for large-scale economic stimulus measures at this time. He emphasized that it will take additional time to fully assess and comprehend the extent of the trade shock resulting from the ongoing tariff conflict.