China plans to exempt certain American goods from the 125% tariff, focusing on textile and semiconductor companies.
The Chinese government is implementing a tariff exemption policy, exempting certain American goods from the 125% retaliatory tariffs, including ethane, certain pharmaceuticals, aircraft engines, and some semiconductor products. Local governments are conducting investigations into textile and semiconductor companies to evaluate the impact of the trade war. Companies must verify if their imported goods qualify for the exemption. The policy has yet to be officially announced, indicating a pragmatic adjustment by China despite maintaining a tough stance.
Key Updates
04/30 11:04
China plans to exempt certain American goods from the 125% tariff, focusing on textile and semiconductor companies.
The Chinese government is implementing a tariff exemption policy, exempting certain American goods from the 125% retaliatory tariffs, including ethane, certain pharmaceuticals, aircraft engines, and some semiconductor products. Local governments are conducting investigations into textile and semiconductor companies to evaluate the impact of the trade war. Companies must verify if their imported goods qualify for the exemption. The policy has yet to be officially announced, indicating a pragmatic adjustment by China despite maintaining a tough stance.
China Creates "Whitelist" to Exempt Some U.S. Goods from Tariffs
According to reports from Reuters and several Asian media outlets, the Chinese government has created a tariff exemption list for U.S. goods, covering specific pharmaceuticals, microchips, aircraft engines, and chemical raw materials. This "whitelist" has not been publicly disclosed but has been privately communicated to relevant companies through local governments. Companies are required to reach out to regulatory authorities to confirm whether their imported goods meet the exemption criteria.
Ethane is confirmed to be exempted. Ethane is a byproduct of U.S. shale gas production, mainly used in China's petrochemical sector. Major Chinese ethane importers include Satellite Chemical, New Hope Chemical, Sanjiang Fine Chemicals, and Wanhua Chemical, while U.S. suppliers are mainly Enterprise Products Partners and Energy Transfer. According to the U.S. Energy Information Administration (EIA), U.S. ethane exports are expected to reach 492,000 barrels per day in 2024, with nearly half exported to China.
Chip Product Exemption Details Unveiled; Only Storage Chips Still Face Tariffs
In the semiconductor sector, China has also implemented tariff exemptions for some U.S. chip products. According to reports from the Industrial and Commercial Times and MoneyDJ, only tariff code 854232 (storage function) remains subject to a 125% tariff, while others like 854231 (control function), 854233 (amplification function), and 854239 (other functions) have been excluded from additional tariffs.
Several Chinese tech companies have confirmed receiving notifications from local customs that some of their imported chip products are eligible for exemptions. It is reported that at least eight semiconductor-related tariff codes have been included in the exemption list. This policy adjustment helps alleviate the supply pressure faced by China's high-tech industry due to its reliance on U.S. technology.
Textile and Semiconductor Companies Under Investigation; Local Governments Conduct Surveys
In addition to implementing exemption policies, the Chinese government is also conducting investigations to understand the impact of the trade war on the real economy. According to reports from the Hong Kong Economic Journal and Newtalk, the Xiamen city government in Fujian Province distributed surveys to local companies on April 27, targeting textile and semiconductor companies. The survey covers the types of trade goods with the U.S., and the estimated impact of tariff policies on revenue and production.
Furthermore, local governments in eastern China have met with foreign business lobbying groups, requesting reports on any critical situations caused by tariff tensions. These measures indicate that China is attempting to provide a basis for future policy adjustments through on-site investigations and data collection.
Companies React: Still Rely on U.S. Technology, Actively Pursuing Exemptions
Several companies selling U.S. products in China have stated that they have been notified by local governments about the existence of the "whitelist." A multinational pharmaceutical company revealed that its branch in Shanghai's Pudong received notification this Monday that some pharmaceuticals could apply for tariff exemptions. The company noted, "We still need a lot of technology from the U.S.," and had proactively applied for exemptions earlier.
Similar situations have occurred in the semiconductor and electronics industries. Some companies have been advised to discreetly contact regulatory authorities to confirm whether their products qualify for exemptions. These companies mostly rely on high-end technology and equipment supplied by the U.S., making tariff exemptions crucial for their operations.
Policy Progressing Quietly; Official Announcement Awaited
Although multiple sources have confirmed that China is promoting tariff exemption policies, as of now, the Ministry of Commerce and the General Administration of Customs have not officially announced the contents of the "whitelist." Analysts suggest that this low-key approach may be to maintain a tough stance against the U.S. while privately providing breathing room for companies.
According to reports from Asia Financial and Yahoo Finance, the Chinese government is communicating with companies through local governments to gradually expand the scope of the exemption list. It remains uncertain whether the complete list will be publicly disclosed in the future.
