China considers tariff exemptions amid trade war

[WORLD] China is exploring the possibility of exempting certain U.S. imports from its steep 125% retaliatory tariffs, marking the strongest indication yet that Beijing is growing increasingly concerned about the domestic economic repercussions of its protracted trade war with Washington. According to a source familiar with the matter, the Ministry of Commerce has tasked a special committee with collecting proposals from companies on goods that could qualify for exemption.

The move comes as mounting signs point to the trade conflict’s toll on China’s economy. While Beijing has long maintained a firm position on tariffs, recent data points to softening demand and a sluggish rebound in consumer activity, compounded by the lingering impact of the pandemic. These trends have placed mounting pressure on Chinese industries and policymakers alike.

Financial publication Caijing, citing anonymous sources, reported Friday that the government is considering excluding eight semiconductor-related products, though memory chips are not among them. A list of 131 product categories allegedly under consideration—ranging from vaccines and chemicals to jet engines—was widely circulated on social media platforms and within business and trade circles. Reuters has not independently verified the authenticity of the list.

The possible exemptions suggest a calculated shift in China’s trade strategy. By selectively lifting tariffs on certain American imports, Beijing seeks to ease economic strain on domestic sectors while signaling a willingness to engage in more pragmatic dialogue with the United States. The measure could also help stabilize global supply chains, which have suffered under ongoing trade friction between the world’s two largest economies.

While Washington has described the current trade status quo as economically unsustainable and has granted tariff relief to specific electronic goods, China has repeatedly vowed to uphold its tariff regime unless the U.S. makes concessions of its own. Yet beneath the combative rhetoric, China’s economic indicators reveal underlying vulnerabilities, including tepid demand and consumer sentiment that has yet to fully rebound from pandemic-era lows.

Despite its strong language, Beijing’s recent actions reflect a more nuanced approach. The proposed exemptions may be seen as an overture aimed at easing the trade standoff and setting the stage for renewed negotiations. The effectiveness of this strategy, however, will largely hinge on the U.S. response and whether both nations are prepared to find a path toward de-escalation.

In the meantime, Chinese authorities are urging exporters hit by tariffs to redirect their focus toward the domestic market. However, businesses report that local demand is weaker, margins are slimmer, and customers less predictable. While tariff exemptions offer more substantive support, they also soften the economic blow for U.S. exporters—potentially reducing pressure on the Biden administration to compromise.