The current trade conflict between the U.S. and China increasingly resembles a sort of audit of mutual economic ties. In the process of confrontation, both sides are actively identifying critically important commodity flows, seeking pressure points on the opponent, and concurrently determining areas where concessions are possible or even necessary. The results of this 'audit' only confirm the well-known fact: the economies of the two giants are deeply interdependent, and breaking these ties is painful for both sides. It is likely that these identified critical dependencies will serve as the foundation for future steps – whether targeted concessions or the beginning of substantive negotiations.
Reports have emerged in the press that under pressure from rising economic costs, the Chinese government is considering the possibility of suspending part of the retaliatory tariffs on goods imported from the U.S. According to sources familiar with the situation, the costs of the conflict are beginning to significantly affect key sectors of the Chinese economy, forcing Beijing to seek ways to soften the blow – which is precisely one of the results of the mentioned 'audit'.
A striking example of this identified dependence is the focus of Chinese authorities on the possible exemption from additional tariffs (which previously reached 125% on certain categories) for critically important goods such as American medical equipment and industrial chemicals, including ethane. The cancellation of tariffs on aircraft leasing is also on the agenda, which would be a significant relief for Chinese airlines heavily dependent on leasing schemes. These steps underscore China's continuing dependence on American supplies in strategic sectors: despite being the largest producer of plastics, the country primarily imports ethane from the U.S., and Chinese hospitals need advanced technologies from American companies like GE Healthcare Technologies Inc.
These potential concessions from Beijing partly mirror steps taken by Washington, which previously excluded a number of Chinese goods, particularly electronics, from its increased tariffs (up to 145% on certain groups). Such mutual concessions, albeit limited, demonstrate the deep interdependence of the two largest economies in the world, where the escalation of the trade conflict has already led to a slowdown in several sectors and raised concerns in global markets.
It is important to note that, according to sources, the final list of exemptions has not yet been formed, and current discussions may not result in specific decisions. It is reported that authorities have requested customs codes from companies in vulnerable sectors for American goods requiring tariff exemptions. Informally, lists of codes reportedly covering key chemicals and components for chips are circulating among traders. There is also information about preparations to cancel tariffs on at least eight categories of goods related to the semiconductor industry (excluding memory chips).
News of a possible easing of tariff policy has already triggered a cautiously positive market reaction – the offshore yuan has slightly strengthened. The very fact that such measures are being considered is perceived as a signal of both sides' readiness to somewhat restrain the escalation of the trade war, which calms business concerns about the negative impact of tariffs. Earlier, the Ministry of Commerce of China held consultations with foreign companies and business chambers, including the European Chamber of Commerce, discussing the impact of tariffs and possible ways to circumvent or mitigate them.
However, a full resolution of the conflict is still far off. Investors are looking for signs of renewed substantive negotiations on tariff reductions, but relations remain stalled. Beijing publicly insists on the cancellation of all unilateral tariffs by Washington as a precondition for the start of dialogue. The U.S. administration has expressed willingness to negotiate, but reports indicate that the Chinese side is not yet ready for high-level contacts, preferring discussions at lower levels.
Despite the official rhetoric of readiness to 'fight to the end', the Chinese economy is experiencing certain difficulties: deflationary pressures and risks of further declines in domestic prices due to the accumulation of unsold export
goods. At the same time, American companies that rely on unique goods from the U.S. to maintain their supply chains in China are also actively seeking tariff relief. Reports indicate that some importers are already bringing goods without applying new tariffs: for example, the aircraft engine manufacturer Safran was informed of an exemption from tariffs on a number of aerospace components.
Thus, a possible decision by China to suspend part of the tariffs on
American imports is an important signal dictated by the economic
realities of the trade war. This step could be the first step toward de-escalating tensions between the two leading economies in the world. However, the persistent hardline stance in negotiations and a complex array of internal and external factors make the further development of the situation and the prospects for a comprehensive resolution of trade disputes uncertain.