China is weighing tariff exemptions on some US imports

Taipei: The Chinese government is considering whether to exclude some essential products from its retaliatory 125 per cent tariffs on American goods, said the head of an American business group in China.

Officials from China's Commerce Ministry had canvassed businesses in China to identify imports from the United States that are crucial to supply chains and vulnerable to China's new trade barriers, Michael Hart, president of the American Chamber of Commerce in China, said at an event in Beijing on Friday.

"There are some companies who have said that if a long-term tariff war continued, their business model would not work in China and we would see them exit," Hart said. "We shared that with the Chinese government because they are of course trying to foster foreign direct investment."

Lifesaving drugs and other health care products were one of the clearest sectors of concern, Hart said.

Markets in Asia and Europe rose Friday as investors looked for signs that the trade tensions between the world's two largest economies were starting to ease.

The trade tensions pose a major challenge for China's economic growth, which has been powered by exports. President Donald Trump ratcheted up tariffs this month to 145% for more than half of China's exports to the United States.

Some factories in southern China have already suspended operations since the beginning of this month, raising concerns about whether unemployment could increase in China.

Chinese officials have responded by not only imposing extraordinary tariffs on U.S. imports, but by encouraging consumers to buy products made in China.

But there are some goods that China does not make. China depends on foreign companies for advanced computer chips, and many in the country's tech industry have hoped semiconductors will escape the tariffs.

There have also been indications that China may be relenting on tariffs on semiconductors made in the United States. This month, a state-backed trade association in China said that a significant portion of advanced chips would be exempt from China's tariffs if they were made outside the United States even if they were sold to China by an American company.

Many advanced chips are designed by American companies like Nvidia, Qualcomm and AMD but manufactured in Taiwan. The guidance said that for the purposes of tariffs, China would not consider such chips as originating in the United States.

Reports have circulated in Chinese media outlets and on Chinese social media this week that Beijing had decided not to put tariffs on some semiconductor-related products made in the United States. The Chinese government has not announced such a policy.

On Thursday, a logistics and warehousing company in Shenzhen said on social media that it had been notified that eight types of chip-related products originating in the United States would be exempt from additional tariffs. A representative from the company, when reached by phone on Friday, could not confirm the reports.

Caijing, a Chinese business magazine, published a report on the exemptions Friday morning. The report was removed within hours.

Guo Jiakun, a spokesperson for the Chinese Foreign Ministry, said he was not familiar with the situation when he was asked Friday at a news briefing whether China was considering rolling back some tariffs on U.S. products.

"Right now we are in a situation of unintended consequences," Hart said. "The United States and China are both doing the same exercise where they are starting to understand that there may have been some unintended consequences to businesses and supply chains from the tariffs and I think that's why we are seeing both of them look at making exceptions."