China Quietly Exempts Select U.S. Imports From 125% Tariffs to Limit Trade-War Damage
Introduction
On April 25, 2025, multiple businesses told Reuters that China had begun exempting certain U.S. imports from its 125% tariffs and was asking companies to identify “critical goods” they need to import levy-free. The move was widely interpreted as a pragmatic attempt to reduce economic self-harm while keeping negotiating leverage in a tense tariff environment.
For operators in manufacturing, pharmaceuticals, aerospace, and semiconductors, the news was not abstract geopolitics—it was a signal that tariff policy may be turning from blanket pressure into targeted, sector-by-sector carve-outs.
Key Points
- Selective relief, not a full rollback. The reported approach focuses on exemptions for specific goods rather than broad industry-wide waivers.
- Supply-chain continuity is the underlying driver. Business groups described the Chinese government asking what U.S.-sourced inputs are effectively “single-source” and would otherwise disrupt production in China.
- Sectors cited in reporting included:
- Pharmaceuticals: Some companies indicated certain drugs were entering without tariffs.
- Aerospace: A major aircraft engine supplier said it was informed that exemptions covered certain aerospace parts (including engines and landing gear).
- Semiconductors: Industry sources referenced waivers affecting some chip categories, with distinctions between analogue and memory chips discussed.
- A bigger exemption list circulated but wasn’t verified. A list of 131 product categories reportedly circulated among businesses and on Chinese social platforms; Reuters could not verify it.
- Markets treated it as a de-escalation hint. The move was framed as one of the clearest signals that both sides may be exploring off-ramps, even as each avoids appearing “first to blink.”
How To
1) If you import into China: determine whether your SKUs may qualify
- Compile your top 50 U.S.-origin SKUs by value and by operational criticality.
- For each SKU, document:
- HS code, supplier, end-use in production
- Substitutability (Can it be sourced elsewhere within 60–120 days?)
- Shutdown impact (What line stops if the input disappears?)
2) Prepare an exemption request package that survives scrutiny
For each candidate SKU, assemble:
- A one-page “criticality memo” (why this input is essential and why alternatives are not viable quickly).
- Supporting evidence:
- Technical specs and qualification requirements
- Sole-source/limited-source rationale
- Production dependency mapping (which products/lines depend on it)
3) Rework contracts to handle sudden policy shifts
- Add or tighten clauses for:
- Tariff pass-through and documentation requirements
- Rapid re-pricing triggers tied to government notices
- Short-term substitution rights (supplier changes, spec-equivalent inputs)
4) Build a “tariff resilience” playbook in parallel
Even if exemptions help, assume volatility continues:
- Dual-source where feasible (including non-U.S. alternatives)
- Increase safety stock for truly single-source inputs
- Align finance and operations on how to treat tariff swings in standard costing
5) Track signals that exemptions are expanding—or tightening
- Monitor:
- Chamber of commerce briefings and member advisories
- Customs guidance updates and enforcement posture
- Sector-specific chatter (chips, pharma, aerospace) where carve-outs often appear first
Conclusion
China’s reported April 25, 2025 tariff exemptions illustrate how trade wars often evolve: headline rates remain high, but governments quietly introduce targeted relief when supply-chain disruption threatens domestic stability. For businesses, the practical opportunity is to treat this as a window to stabilize critical imports—while still planning for renewed volatility.