China exempts some U.S. imports from 125% tariff rate


China exempted some U.S. imports from its 125 per cent tariffs on Friday, according to businesses, although China quickly knocked down U.S. President Donald Trump’s assertion that negotiations between the two countries were underway.

Trump’s administration has in recent days signalled it is looking to de-escalate the confrontation between the world’s two largest economies, which has so far frozen much of the trade between them and raised fears of a global recession. 

“As a quid-pro-quo move, it could provide a potential way to de-escalate tensions,” said Alfredo Montufar-Helu, a senior adviser to the Conference Board’s China Center, a think-tank.

But he cautioned: “It’s clear that neither the U.S. nor China want to be the first in reaching out for a deal.”

Trump told reporters on Friday that he had spoken to Chinese President Xi Jinping “numerous times,” but did not say when the two leaders last talked or what topics they discussed. 

This comes shortly after Trump told Time magazine in an interview that the Chinese president had called him.

“He’s called. And I don’t think that’s a sign of weakness on his behalf,” Trump told the magazine

Beijing has so far disputed the U.S. characterization of talks — the Chinese Embassy said again on Friday that there have been no talks between the two countries, adding in a statement that the U.S. should “stop creating confusion.” China has also not communicated publicly on any exemptions.

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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 to outlast Washington in enduring trade war pain.

A Ministry of Commerce task force 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.

“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 member pharmaceutical companies had reported being able to import drugs to China without tariffs. He believed the exemptions were drug-specific, not industrywide.

The chief executive of French aircraft engine maker Safran said on Friday it had been informed the previous 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.

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A list of 131 categories of products said to be under consideration for tariff exemptions was circulating on Chinese social media platforms and among some businesses and trade groups on Friday. Reuters could not verify the list, which included items ranging from vaccines and chemicals to jet engines.

Huatai Securities said the list corresponded to $45 billion US worth of imports to China last year.

China’s customs agency and Ministry of Commerce did not reply to requests for comment. China’s Foreign Ministry said it was not familiar with tariff exemption plans, redirecting queries to “relevant authorities.”

Lasting fight

While Washington has said the trade standoff with China is economically untenable and already offered tariff exemptions to some electronic goods, China has repeatedly said it is willing to fight to the end unless the U.S. lifts its 145 per cent tariffs.

But China’s economy headed into the trade war with rising unemployment, deflationary pressures and heightened concern that a mounting backlog of unsold exports could drive domestic prices even lower.

While China ran a trillion-dollar trade surplus in 2024, it also relies on the United States for key imports, including the petrochemical ethane needed to make plastics and some drugs.

Big pharmaceutical companies including AstraZeneca and GSK have at least one manufacturing site in the U.S. for drugs sold in China, according to Chinese government data.

Major ethane processors have already sought tariff waivers from Beijing because the U.S. is the only supplier. 

Trump touts possible deals

Trump told reporters at the White House that he was very close to a deal with Japan. That is seen by analysts as a “test case” for other bilateral trade agreements, although talks could be difficult. Some expect Prime Minister Shigeru Ishiba and Trump to announce a pact when they meet at the G7 summit in Canada in June.

Trump separately told Time magazine that he had made “200 deals” that would be completed within three to four weeks, although he declined to provide specifics. He said he would consider it a “total victory” if tariffs were still 20 per cent to 50 per cent a year from now.

The office of the U.S. Trade Representative said it had held a productive meeting with South Korea on Friday. 



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