China Signals Peace by Weighing Tariff Exemptions on Key U.S. Imports

The Chinese government is reportedly hinting to ease tensions with the U.S. by considering exemptions on certain U.S. imports from its 125% tariffs, the latest sign of de-escalation in the ongoing trade war. According to reports from Bloomberg and Reuters, Beijing has asked businesses to identify customs codes for goods that are difficult to source from countries other than the U.S, and could thwart supply chains. This move suggests that China is extremely worried about the economic fallout from the intensifying trade war with Washington.

Items Beijing Is Considering for Exemptions

Two of the most notable goods being considered for exemption are medical equipment and industrial chemicals like ethane, which are hard to find elsewhere. Despite being a leading manufacturer of plastic items, China still depends heavily on ethane from the U.S. to process these goods. Moreover, Chinese hospitals depend on advanced medical equipment such as magnetic resonance imaging and ultrasound machines built by American companies.

Additionally, the ministry is mulling removing tariffs for aircraft leases, since many Chinese airlines do not own all their planes and instead pay leasing fees to third-party companies. These payments could be subject to tariffs and increase the burden on the airlines. Also, some companies were informed about exemptions on aerospace equipment parts such as engines and landing gear.

Notably, a Ministry of Commerce taskforce is gathering a list of items from companies that could be exempted from the tariffs and is also seeking their advice on additional requests. Interestingly, a report by the news magazine Caijing reported that China is quietly considering exempting at least eight semiconductor items from tariffs, excluding memory chips. In total, Beijing is considering exemptions on 131 items.

De-escalation of the U.S.-China Trade War

Beijing’s move follows Washington’s decision last week to remove electronic and semiconductor items from Chinese tariffs. Although the U.S. imports far more goods from China than the other way round, Beijing’s consideration to exempt certain items underscores its reliance on specific American goods.

Notably, economies worldwide are continuously being affected by the constant tit-for-tat between the two nations. Investors are watching for positive signs that the U.S. and China will come to an agreement on the looming tariffs issue, with a win-win situation for both countries. However, according to recent reports, China has insisted that President Trump remove all unilateral tariffs before coming to the negotiating table. It’s a wait-and-watch situation for now, but the small moves made by both the nations are suggesting that peace talks may be on the horizon.

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