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China’s government is considering suspending its 125% 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 possibility of some goods being exempted boosted investor optimism, as shares in Asia rose and the yuan erased losses.
“It’s another step toward a de-escalation of the trade war,” Kok Hoong Wong, head of institutional equities sales trading at Maybank Securities Pte, said, attributing strength in Hong Kong, Chinese and Japanese stocks to the report. While most don’t expect the US and China to set aside their differences quickly, he said “it would appear the worst may truly be over.”
The exemptions China is mulling mirror similar moves on the part of the US, which excluded electronics from its 145% tariff on Chinese imports earlier this month. 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.
“A couple of our member companies have reported that even within the last week, they had a few shipments that were imported that did not have tariffs levied on them,” Michael Hart, president of the American Chamber of Commerce in China, said during a press conference on Friday in Beijing. “It does look like both governments are looking carefully and don’t want to stop trade overall.”
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.