China quietly reduces retaliatory tariffs on some US-made semiconductors
What's the story
China has slashed retaliatory tariffs on some US-made semiconductors. The move was confirmed to CNN by three import agencies in Shenzhen, China's southern technology hub.
The tariff cuts specifically apply to integrated circuits (also known as microchips) or semiconductors.
The exemptions were found recently and are viewed as Beijing's effort to cushion the blow of an ongoing trade war with the US on its vital tech industry.
Trade tensions
Tariff reduction follows US-China trade war escalation
The tariff reduction on US-made semiconductors comes after China raised its reciprocal tariffs to 125% on certain goods from the US on April 12.
The move was in response to President Donald Trump's decision to increase levies on Chinese goods by a whopping 145%.
Despite projecting confidence in its ability to handle the escalating trade war, these exemptions indicate China needs to ease some duties on essential items it can't produce domestically or source elsewhere.
Import dependency
China's reliance on US semiconductor imports highlighted
China imported semiconductors worth $11.7 billion from the US, according to customs data.
Even though its own semiconductor industry is making good progress, China continues to be heavily dependent on chip imports and chipmaking equipment from the US, Taiwan, South Korea, Japan, and the Netherlands.
Duncan Clark from BDA said these exemptions show China's lack of "autonomy in chips," hinting it will take time to achieve full independence.
Market impact
Unofficial exemptions benefit US chipmakers
The unofficial tariff exemptions are likely to benefit American chipmakers like Intel, Texas Instruments, and Global Foundries.
Chinese authorities have yet to publicly confirm these exemptions.
Chen Shaoling, a manager at an import agency, named Zhengnenliang Supply Chain, told CNN that she found out on Thursday that tariffs on eight types of integrated circuits had been waived to zero during a routine customs clearance for her customers.
She said they only found out after filing the declaration.
Support measures
China aids tech sector with tariff removals
This isn't the first time China has supported its tech sector.
Earlier this month, China lifted tariffs on chips designed by American companies but manufactured outside the US.
For example, NVIDIA's products are mostly manufactured in Taiwan by TSMC.
The state-backed China Semiconductor Industry Association said the "declared country of origin" should be where the product was made.
Meaning, semiconductors from American chip designers like Qualcomm and NVIDIA manufactured outside America wouldn't attract China's 125% tariff on US goods.