China exempts selected US goods from steep tariffs while publicly denying any negotiations with the Biden administration in a strategic economic move that reveals the complexities of the ongoing trade war.
At a Glance
- China is exempting certain US imports from 125% retaliatory tariffs while officially denying ongoing negotiations with the US
- Semiconductors, certain pharmaceuticals, and some aerospace equipment parts have already received exemptions
- Chinese officials are consulting with businesses to identify crucial US imports that have no alternatives
- The move appears aimed at protecting China’s economic interests while maintaining a tough public stance
- Markets in Asia and Europe rose on news of potential easing in trade tensions
China’s Strategic Tariff Exemptions
China has begun exempting select US imports from its 125% retaliatory tariffs while simultaneously denying that any negotiations are taking place with the United States. The Chinese Ministry of Commerce is actively gathering lists of products that might qualify for exemptions, focusing particularly on goods that Chinese businesses cannot easily source elsewhere.
The government has already dropped tariffs on at least eight classifications of US semiconductors to zero and granted exemptions for specific pharmaceutical products and aerospace equipment parts from French company Safran.
Reports indicate that a list of 131 product categories being considered for exemptions has circulated on Chinese social media. Further exemptions are under consideration for medical equipment, industrial chemicals like ethane, and airplane leases.
These targeted exemptions demonstrate Beijing’s careful balancing act between maintaining a tough stance in the trade war and protecting critical domestic industries from supply chain disruptions that could further damage its already struggling economy.
China grants some tariff exemptions for US imports as trade war bites https://t.co/mIw9pRWxf7
— Financial Times (@FT) April 25, 2025
Economic Realities Driving Policy
Despite public posturing, China’s exemption strategy reveals the economic pressures forcing pragmatic policy adjustments. The Chinese economy faces significant challenges including rising unemployment, deflationary pressures, and factory closures. Officials appear particularly concerned about protecting industries where the US provides essential inputs that cannot be easily substituted. This aligns with the government’s broader priority of maintaining domestic stability while preparing for what its Politburo has acknowledged could be a prolonged trade conflict.
“The Chinese government, for example, has been asking our companies what sort of things are you importing to China from the U.S. that you cannot find anywhere else and would shut down your supply chain,” said Michael Hart.
Michael Hart, President of the American Chamber of Commerce in China, revealed that some companies have warned they might exit the Chinese market entirely if the tariff war continues long-term. The Chinese Finance Ministry has established a system for companies to request tariff exemptions, indicating a recognition that protecting major industries takes precedence over maintaining blanket retaliatory measures that could harm domestic economic interests.
China grants some tariff exemptions for US imports as trade war bites https://t.co/2YOsGanSev
— FT China (@ftchina) April 25, 2025
Public Stance vs. Private Actions
Beijing continues to project strength publicly while making calculated adjustments behind the scenes. Chinese officials have explicitly denied US claims of ongoing trade talks and have urged Washington to “stop creating confusion.” They maintain that China is prepared to continue the trade war unless the US lifts its 145% tariffs on Chinese goods. This messaging reflects China’s unwillingness to appear as the party seeking compromise first, even as it takes steps that could potentially reduce tensions.
“As a quid-pro-quo move, it could provide a potential way to de-escalate tensions,” said Alfredo Montufar-Helu.
The Biden administration has signaled a desire to de-escalate trade tensions, though neither country appears eager to initiate formal negotiations. China’s exemption strategy mirrors similar US actions, which excluded certain electronics from tariffs to benefit American companies like Apple and Nvidia. The news of potential exemptions led to positive reactions in financial markets, with Asian and European shares rising and the Chinese yuan recovering some ground as investors anticipated a possible easing of trade tensions.
