China may exempt some US goods from tariffs - Bloomberg

The Chinese government is considering suspending the 125% tariff on some goods from the United States, Bloomberg reports, citing informed sources, pointing out that this is happening against the background of the fact that the economic costs of the "tit-for-tat" trade war are severely affecting some industries, UNN writes.

Details

The country's authorities are considering abolishing additional duties on medical equipment and some industrial chemicals, such as ethane, sources said, asking not to be named, discussing private discussions.

Officials are also discussing the abolition of duties on aircraft rental, sources said. Like many airlines, Chinese carriers do not own all of their aircraft and pay leasing fees to third-party companies for the use of some aircraft - payments that would become financially devastating with an additional duty.

The market reaction to the exceptions for some goods was rapid: the offshore yuan rose slightly to 7.2857 per dollar, offsetting losses on Friday morning by up to 0.1%.

The exemptions considered by China reflect similar steps by the United States, which excluded electronics from its 145% tariff on Chinese imports earlier this month. The reversals reflect how closely intertwined the world's two largest economies are, with some key industries stalled after the trade war escalated, the publication writes.

The list of exceptions, as indicated, is still under development, and discussions may not progress. Companies in vulnerable sectors have received a request from the authorities to provide customs codes for US goods that they need to be exempt from new duties, other informed sources said. At least one Chinese airline has been informed that payments to aircraft leasing companies located in free trade zones will not be subject to the new fee, one source said.

Traders are also distributing allegedly exempt lists of customs codes that correlate with key chemicals and components for the production of microchips. Bloomberg was unable to independently verify the lists.

Beijing is also preparing to abolish additional duties on at least eight types of semiconductor products, Caijing reported on Friday, citing anonymous sources. These categories do not yet include memory chips, the publication reported, which could be a potential blow to Micron Technology Inc., the world's third-largest memory chip manufacturer.

Investors are looking for signs that the two countries will cooperate in reducing tariffs, but relations still appear to be in a state of stagnation. On Thursday, Chinese officials publicly demanded that the United States abolish all unilateral tariffs before agreeing to trade negotiations. US President Donald Trump has been trying to contact Chinese President Xi Jinping by phone since returning to office, but the Chinese leader has so far resisted, insisting instead on lower-level talks to produce an agreement.

On the American front, the Trump administration has exempted smartphones, computers and other electronics from so-called reciprocal tariffs - large exceptions for global technology manufacturers, including Apple Inc. and Nvidia Corp., although potentially temporary. The exemptions cover smartphones, laptops, hard drives and computer processors and memory chips, as well as flat panel displays.

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