China has quietly rolled back its steep 125% retaliatory tariffs on select U.S.-manufactured semiconductors, aviation equipment, and pharmaceuticals, signaling growing concern in Beijing about the economic fallout from its prolonged trade war with Washington.
The tariff exemptions, confirmed by multiple import agencies in Shenzhen and disclosed by businesses such as French aerospace manufacturer Safran, reflect Beijing's effort to mitigate damage to vital domestic industries reliant on American imports. The move follows months of escalating reciprocal tariffs, with the U.S. previously imposing 145% duties on Chinese goods.
Chen Shaoling, a manager at the import agency Zhengnenliang Supply Chain in Shenzhen, reported discovering on Thursday that tariffs on eight categories of U.S.-made semiconductors had been reduced to zero. "We only found out after we filed the declaration-without doing that, we wouldn't have known," Chen said, adding that the news is now rapidly spreading across China's tech hubs.
Duncan Clark, chairman of technology investment advisory firm BDA, interpreted the semiconductor exemptions as a clear indication China does not yet have "autonomy in chips." Despite Beijing's ambitions, Clark noted, "it's going to be a while before it can be fully autonomous."
American chipmakers Intel, Texas Instruments, and Global Foundries stand to benefit significantly from the exemptions, according to Ray Wang, a Washington-based analyst specializing in U.S.-China tech competition. Semiconductors represent a critical dependency for China, which imported approximately $11.7 billion in U.S.-made chips last year alone, Chinese customs data show.
Alongside semiconductors, tariff exemptions now include certain aerospace equipment, such as jet engines and landing gear, essential to China's aviation sector. Safran CEO Olivier Andries confirmed receiving notice from Chinese authorities late Thursday, stating, "China has decided to exempt from tax any deliveries of engines, nacelles, landing gears or parts."
Additionally, the American Chamber of Commerce in China has reported exemptions for pharmaceuticals, notably medicines produced exclusively in the United States. Michael Hart, President of AmCham China, indicated exemptions were selectively granted for critical items pharmaceutical firms said could not be sourced elsewhere.
These selective tariff reductions mark Beijing's first substantial step toward easing trade tensions since the Trump administration recently exempted smartphones and computers from U.S. tariffs, significantly benefiting companies like Apple. Alfredo Montufar-Helu, a senior adviser at the Conference Board's China Center, noted the move could serve as "a potential way to de-escalate tensions," though he added neither side appears eager to publicly initiate a broader agreement.
China's Commerce Ministry has begun soliciting lists from foreign and domestic companies detailing essential American imports requiring tariff relief, a strategy intended to maintain industrial stability. Jens Eskelund, president of the European Union Chamber of Commerce in China, confirmed having raised similar exemption requests with the ministry.
A preliminary list circulating on Chinese social media and trade groups identifies 131 product categories under exemption consideration, ranging from vaccines and specialized chemicals to aviation and semiconductor components. According to Chinese brokerage Huatai Securities, this could correspond to approximately $45 billion in annual imports.
While these developments suggest a tactical softening by Beijing, Chinese Foreign Ministry spokesperson Guo Jiakun maintained Friday, "There have been no negotiations between China and the United States on the issue of tariffs," directly contradicting President Trump's earlier claim of ongoing talks.
