China exempts some goods from US tariffs
China has exempted some US imports from its 125-percent tariffs and is asking firms to identify critical goods they need levy-free, according to businesses that have been notified. This is the clearest sign yet of Beijing’s concerns about the trade war’s 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. This had frozen much of the trade between them and raised fears of a global recession.
Beijing’s exemptions, which business groups hope would extend to dozens of industries, pushed the US dollar up slightly and lifted equity markets in Hong Kong and Japan.
“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 US nor China want to be the first in reaching out for a deal.”
China has not yet communicated publicly on any exemptions.
US President Donald Trump told TIME magazine in an interview that US-China talks were taking place on tariffs, and that Chinese President Xi Jinping had called him. Beijing has so far disputed the US characterization of talks.
Xi ‘called’
“He’s called. And I don’t think that’s a sign of weakness on his behalf,” Trump told TIME. He did not say when Xi called or what the two leaders discussed.
Equity markets largely shrugged off the interview. European shares remained in positive territory, while US stock futures failed to hold onto early gains and were little changed on the day.
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 US tariffs on investment and the operation of foreign firms.
