By Andrew Silver, Trixie Yap and Brenda Goh
(Reuters) -China has exempted some U.S. imports from its 125% tariffs and is asking firms to identify critical goods they need levy-free, according to businesses notified, in the clearest sign yet of Beijing’s concerns about the trade war’s economic fallout.
The dispensation, which follows de-escalatory statements from Washington, signals that the world’s two largest economies were prepared to rein in their conflict, which had frozen much of the trade between them, raising fears of a global recession.
Beijing’s exemptions – which business groups hope would extend to dozens of industries – pushed the U.S. dollar up slightly and lifted equity markets in Hong Kong and Japan.
China has not yet communicated publicly on any exemptions.
A Friday statement by the Politburo, the Communist Party’s elite decision-making body, focused on efforts to maintain stability at home, by supporting firms and workers most affected by tariffs.
The readout, which followed the Politburo’s regular monthly meeting, showed that Beijing was also ready to hunker down and fight a trade war of attrition, if needed, a strategy of trying to outlast Washington in enduring the pain resulting from the breakdown of their relationship.
A Ministry of Commerce taskforce is collecting lists of items that could be exempted from tariffs and is asking companies to submit their own requests, according to a person with knowledge of that outreach.
The ministry said on Thursday it had held a meeting with more than 80 foreign companies and business chambers in China to discuss the impact of U.S. tariffs on investment and the operation of foreign firms in the country.
“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 so would shut down your supply chain,” American Chamber of Commerce in China President Michael Hart said.
Hart added some of their member pharmaceutical companies have reported being able to import drugs to China without tariffs. He believed the exemptions were drug-specific, not industry-wide.
The chief executive of French aircraft engine maker Safran said on Friday it had been informed last night that China had granted tariff exemptions on “a certain number of aerospace equipment parts,” including engines and landing gear.
The tariff exemptions under consideration by Beijing could provide cost relief for companies in China and take pressure off U.S. exports at a time when the Trump administration has shown signs of wanting to make a deal with Beijing.
