In the backdrop of rising trade wars with Washington, Beijing has reportedly started to partially withdraw its 125 per cent retaliatory tariffs on certain US imports. This would seem to be an initiatory step in resolving the long-standing trade disputes between the two nations.
The move comes as Beijing is grappling with domestic economic challenges, and businesses are pushing for relief on critical goods.
Beijing asks businesses to submit exemption requests
According to a Reuters report, China’s Ministry of Commerce has initiated a consultation process. They have been asking companies and trade groups to identify which US goods are essential to their supply chains.
The news agency quoted their sources as saying that the task force is now collecting lists of items that will be eligible for exemptions.
Reportedly, a draft list of 131 product categories is circulating among businesses. It added that the list includes goods like vaccines, aerospace components like engines & landing gear, and industrial chemicals.
However, memory chips haven’t been mentioned in the list.
The report added that the Chinese government has not officially published the list or confirmed its final scope. Huatai Securities estimates that the items could correspond to $45 billion worth of US imports in 2024 alone.
US-China trade war shows signs of possible de-escalation
The tariff exemptions have come after de-escalatory statements from Washington and an unconfirmed phone call between Chinese President Xi Jinping and his US counterpart, Donald Trump.
However, China has not verified if the conversation was held. The gesture is an indicator that both sides are testing the waters for future negotiations.
Tariffs are causing strain on domestic firms
Reportedly, China’s decision came since its economy is struggling to rebound from post-pandemic lows.
Amid the weak consumer spending and rising unemployment, the Chinese government is encouraging tariff-hit exporters to shift focus to domestic markets.
However, the businesses have complained that local demand is minimal, and profit margins are low.
The American Chamber of Commerce in China confirmed that some of its member companies, including pharmaceutical firms, have received tariff exemptions.
President Michael Hart, speaking about the exemptions, said that it apparently will be granted on a case-by-case basis rather than by industry.
Long road ahead
In spite of the exemptions, Beijing is yet to soften its core demand—a full rollback of US tariffs.
The Politburo of the Communist Party, in a recent meeting, said they were ready for a prolonged trade war but also expressed their support for affected domestic industries.
The outcome of Beijing’s rollback on exemptions remains undetermined. However, it does offer a glimmer of hope for strained businesses and international markets alike.
Markets lift as US-China trade tensions ease
The financial markets responded with modest optimism; the equity markets in Hong Kong and Japan edged up. European stock markets too saw a modest rise on Thursday.
London's FTSE 100 increased by 0.1 per cent, Germany's DAX rose 0.7 per cent, and Paris' CAV rose 0.4 per cent. The broader STOXX 600 index was unchanged, while all Wall Street futures, including the S&P 500, Dow, and Nasdaq, were higher. The pound fell 0.2 per cent against the US dollar.
FAQs
What US products are being exempted from tariffs by China?
Although no official list has been released, reports indicate that exemptions include products such as vaccines, ae ..
Is this a sign that the US-China trade war is ending?
Not yet. Exemptions indicate readiness to release tensions, but both sides are still adamant on major demands, and no official agreement has been signed yet.
Source Name : Economic Times