China weighs exempting some US goods from tariffs as costs rise

BEIJING – China’s government is considering suspending its 125 per cent tariff on some US imports, people familiar with the matter said, as the economic costs of the tit-for-tat trade war weigh heavily on certain industries.

Authorities are considering removing the additional levies for medical equipment and some industrial chemicals like ethane, the people said, asking not to be identified discussing private deliberations.

Officials are also discussing waiving the tariff for plane leases, the people said.

Like many airlines, Chinese carriers don’t own all of their aircraft and pay leasing fees to third-party companies to use some jets – payments that would have become financially ruinous with the additional tariff.

The exemptions China’s mulling mirrors similar moves on the part of the US, which excluded electronics from its 145 per cent tariff on Chinese imports earlier in April.

The pullbacks reflect how deeply intertwined the world’s two biggest economies are, with some key industries grinding to a halt after the trade war escalated.

While the US imports far more from China than the other way around, Beijing’s move spotlights the areas of its economy that remain reliant on US goods.

China is the world’s largest plastics manufacturer, but some of its factories depend on ethane, which is mainly imported from the US.

And its hospitals rely on advanced medical equipment like magnetic resonance imaging and ultrasound machines made by US firms like GE Healthcare Technologies Inc.

China’s Ministry of Finance and General Administration of Customs did not respond to requests for comment.

The list of exemptions is still in flux and discussions may not progress.

Companies in vulnerable sectors have been asked by authorities to submit the customs codes of US goods that they need to be exempt from the new tariffs, other people familiar with the matter said.

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