Beijing is considering waiving tariffs on U.S. imports as the Ministry of Commerce holds intensive consultations with foreign businesses, which include 131 categories of products such as vaccines.

Beijing is considering granting tariff exemptions on U.S. imports, which include 131 categories of products such as vaccines, chemicals, and jet engines. The Chinese Ministry of Commerce has engaged in discussions with over 80 foreign companies and chambers of commerce, seeking confirmation of key items that require exemptions. This initiative aims to alleviate the impact of the trade war on the economy and foreign investment. U.S. Chamber of Commerce President Hart confirmed that certain pharmaceuticals have already been granted exemptions, and the EU Chamber of Commerce has also made initial progress in negotiations.

Beijing Begins Considering Tariff Exemptions, Focusing on Specific Pharmaceuticals and Key Products

According to multiple media reports, the Chinese government is considering exempting certain U.S. goods from up to 125% retaliatory tariffs. Informed sources revealed that the Ministry of Commerce of China has established a task force to compile a list of goods eligible for exemption. A draft circulating online shows that the products under consideration for exemption cover 131 categories, including vaccines, chemicals, and jet engines.

Michael Hart, president of the American Chamber of Commerce in China, confirmed in an online press conference that some pharmaceutical companies have reported that certain drugs are eligible for tax-free import. He emphasized that the exemptions are limited to specific drugs and are not generally applicable to the entire pharmaceutical industry.

Additionally, Jens Eskelund, president of the European Union Chamber of Commerce, pointed out that many pharmaceutical industry members in China have production bases in the United States and export active pharmaceutical ingredients to China, which are also affected by tariffs. Some European medical equipment manufacturers have begun negotiations with Chinese officials and have achieved preliminary results.

Ministry of Commerce Engages in Intensive Consultations with Foreign Businesses, Requests Confirmation of Key Items

This week, the Ministry of Commerce of China met with representatives from over 80 foreign businesses and foreign chambers of commerce to discuss the impact of tariffs on foreign investment and operations. During the meeting, the Ministry asked businesses to identify which imported goods from the U.S. are irreplaceable and critical to the supply chain.

After the meeting, Hart stated that the Chinese government is particularly concerned about products that, if not imported, would disrupt the supply chain. He noted that the government asked businesses, "Which goods imported from the U.S. cannot be sourced elsewhere?"

This process indicates that Chinese authorities are attempting to precisely identify imported goods that have the greatest impact on the domestic economy and industrial chain and are considering targeted tariff exemptions.

Pharmaceutical and Medical Equipment Industries Bear the Brunt

Amid the U.S.-China trade war, the pharmaceutical and medical equipment industries are among the sectors most severely impacted by tariffs. Major pharmaceutical companies like Johnson & Johnson and Merck have forecasted a decline in performance due to the impact of tariffs. Thermo Fisher Scientific estimates that its sales in the Chinese market will decrease by $400 million this year, accounting for 8% of its global business.

Since many common drugs for treating diseases such as cancer and diabetes come from Western countries, these products have become key targets of China's retaliatory tariffs. Without tariff exemptions, businesses will face pressure to absorb costs or raise prices, especially for products included in China's national medical insurance drug list or bulk procurement plans.

Draft of 131 Product Categories Circulates, Official Announcement Pending

Currently, the exemption list covering 131 product categories is still in draft form and has not been officially announced or confirmed by the Chinese government. According to foreign media reports, the list includes vaccines, aviation components (such as engines and landing gear), and industrial chemicals, but does not mention memory chips.

Both the American Chamber of Commerce and the European Union Chamber of Commerce stated that exemptions will be reviewed on a case-by-case basis rather than applied to entire industries. Companies need to proactively submit applications to the Ministry of Commerce of China, providing customs codes and justifications for the necessity of the relevant goods.

Foreign Businesses' Responses and Subsequent Developments

Following the Chinese government's signal of tariff exemptions, some foreign businesses have begun individual negotiations with officials. European medical equipment manufacturers revealed that negotiations with Chinese officials have achieved some progress, but a complete agreement has not yet been reached.

Meanwhile, the American Chamber of Commerce also noted that some member companies have recently imported drugs without being subjected to the 125% heavy tax, indicating that exemption measures may have already been implemented in certain areas. However, there is currently no unified policy, and more actions are one-time operations.

Although a spokesperson for the Chinese Ministry of Foreign Affairs emphasized that the U.S. and China have not engaged in formal consultations on tariff issues, Beijing's actions regarding exemptions for specific goods have become a key indicator for monitoring the dynamics of the U.S.-China trade war.

References

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