China Reportedly Begins Exempting Key US Imports From Tariffs, Including Pharma And Aerospace Parts

In a move that demonstrates potential to ease trade tensions, China has reportedly begun to exempt US imports from high tariffs and is actively seeking feedback from companies on other important items they want to exclude from them.

what happened: Chinese companies say they were approached by the authorities.

Some drug imports and aerospace components, such as engines and landing gear, have reportedly been excluded from the 125% tariff. President China’s American Chamber of Commerce Michael Hart In particular, several member companies of pharmaceutical companies have confirmed that they do not have to pay customs duties.

reference: Trump will be the first to “blink” in the Chinese trade war, Flexport’s Ryan Petersen told Scott Galloway:

Why is it important?: Exemptions are being made as both Beijing and Washington show prominent signs of escalation in the trade war, shaking markets and highlighting global supply chains. “As a Quid-Pro-Quo move, it could provide a potential way to remove tension,” he said. Alfredo Montufar-Helu of the China Center of the Conference Committee.

However, he said neither side appears to be keen on making the first formal move to make the deal. China’s Commerce Department denied rumors of a trade debate with the US on Thursday.

China’s leadership has not issued an official statement about the exemption, but the move appears to be aimed at protecting domestic industries from further pressure. Exemptions could be just the beginning, as key sectors still rely on American inputs ranging from ethane to special drugs. “There is clearly an interest in unilateral exemptions for irreplaceable products,” observed Monfarfer Hell.

Read next: Charlie Munger once observed that the full-scale US-China tariff war was “very stupid.”

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