China exempts some US semiconductors from 125% tariffs
- Recent reports indicate that China has rolled back some tariffs on US semiconductors to zero.
- The change was highlighted by import agencies in Shenzhen and suggests a strategic adjustment amidst ongoing trade tensions.
- This exemption could benefit US chip manufacturers but comes amidst concerns regarding the stability of the semiconductor market.
In a significant development regarding international trade relations, China recently rolled back its retaliatory tariffs on select US-made semiconductors. This change, which came to light through import agencies in Shenzhen, indicates a possible shift in China's strategy amidst ongoing trade tensions with the United States. The tariffs were originally raised to 125% on April 12, 2023, in response to an increase in US tariffs on Chinese goods. The exemption now applies to eight tariff codes that cover most semiconductors, excluding memory chips, suggesting that China is attempting to secure essential technology that it may struggle to produce or source domestically. Despite the positive implications of the exemption for US semiconductor companies and the overall market, Chinese authorities have not officially confirmed this change, and many local customs offices were initially unaware of the exemption until it was discovered during routine custom clearance operations. The news has spread quickly among import agencies, with companies like Shenzhen HJET Supply Chain and Taihang Semiconductor confirming receipt of notifications from local customs about the tariff changes. These developments suggest that China needs to address the challenges posed by trade restrictions and ensure access to crucial technology. However, while this might provide temporary relief for US companies affected by the tariffs, analysts are advising caution amid the broader backdrop of ongoing trade tensions. Experts from firms like JPMorgan and Morgan Stanley are sounding alarms regarding the semiconductor cycle, notable US-China relations, and the implications of LE chips in potential export bans. While the rollback of tariffs seems positive, it also coincides with an underlying caution due to potential market volatility, particularly for companies like Nvidia. In light of new realities in global trade and economic conditions, such exemptions may be essential for maintaining competitiveness in a sector that is rapidly evolving and subject to geopolitical influences. Companies and investors alike should remain vigilant and adaptable as they navigate this uncertain landscape.