China has quietly lifted its 125% retaliatory tariff on certain U.S.-made integrated circuits, three Shenzhen import agencies told CNN on April 24, 2025. The unpublicized exemptions cover eight specific tariff codesโprimarily logic chips and reduce duties to zero, underscoring Beijingโs need to shield its critical technology sector from steep levies it cannot yet replace with domestic production.
Tit-for-Tat Tariffs Escalate
On April 12, China imposed 125% duties on all American-origin goods in direct response to President Donald Trumpโs decision to raise U.S. tariffs on Chinese imports to 145%. The reciprocal measures targeted a broad array of products, from agricultural commodities to high-tech components, marking one of the most aggressive tariff escalations in the two-year trade conflict.
Semiconductorsโmicroscopic chips that power everything from smartphones and servers to automobilesโare central to modern technology. Despite state-backed investments and incentives to cultivate a homegrown industry, China remains heavily dependent on imports of advanced integrated circuits and chipmaking equipment from the United States, Taiwan, South Korea, Japan and the Netherlands. In 2024 alone, China imported $11.7 billion worth of semiconductors from U.S. suppliers.
Discovery of the Exemptions
Three independent import agencies based in Shenzhen the heart of Chinaโs electronics manufacturing hub reported that they first learned of the tariff rollback when routine customs declarations unexpectedly applied a zero duty rate. โWe only found out after we filed the declaration without doing that we wouldnโt have known,โ said Chen Shaoling, manager at Zhengnenliang Supply Chain.
Shenzhen HJET Supply Chain confirmed via a social media post that eight Harmonised System codes for integrated circuits are now exempt from customs duties. Taihang Semiconductor, another local importer, stated that it had received official notice from customs but declined to provide further details, calling the change โdefinitely a good thing.โ Neither the General Administration of Customs nor the Ministry of Commerce has publicly acknowledged the carve-out.
Strategic Rationale: Protecting a Vulnerable Sector
Analysts say the exemptions highlight Beijingโs recognition that its domestic chipmaking capabilities especially for logic chips that process and control dataโare not yet sufficient to meet demand. โThe exemptions suggest China does not have autonomy in chips,โ said Duncan Clark, chairman of technology advisory firm BDA. He noted that while China aspires to self-sufficiency, it will take years before on-shore production can replace imported high-end semiconductors.
Ray Wang, a Washington-based analyst of U.S. China tech competition, added that American firms such as Intel, Texas Instruments and GlobalFoundries stand to regain competitiveness in the Chinese market now that punitive levies have been lifted.
Broader Rollbacks and Industry Response
Beyond semiconductors, China has granted targeted relief on certain aerospace components. Olivier Andries, CEO of French engine maker Safran, stated that Beijing has exempted engines, nacelles, and landing gear from the 125% tariff. These parts are crucial for Chinaโs burgeoning commercial aviation industry, including the domestically developed C919 jet.
Reuters reports that Chinese authorities are surveying businesses to identify additional goods for possible exemptionโan indication that Beijing may selectively unwind tariffs on items deemed vital to key industries.
Market Reactions and Geopolitical Implications
News of the semiconductor carve-out triggered a modest rebound in Asian equity markets and a stabilisation of the yuan, which had weakened under pressure from trade war uncertainty. Still, the episode highlights the fragility of global supply chains when they become entangled in the crossfire of geopolitical disputes.
At a regular press briefing, Foreign Ministry spokesperson Guo Jiakun denied any formal negotiations with the United States, insisting that China will not engage in talks until U.S. tariffs are fully removed. โThere have been no negotiations between China and the United States on the issue of tariffs,โ he said. โThe U.S. should not mislead the public.โ
Meanwhile, President Trump has signalled a willingness to soften his tariff stance, exempting consumer electronics such as smartphones and computers from U.S. reciprocal levies, effective on April 11. He pledged that tariffs would โcome down substantiallyโ if China commits to substantive trade talksโa proposition Beijing has so far rebuffed.
Whatโs Next for Industry and Policy
In the short term, Chinese importers of integrated circuits and aerospace parts will benefit from lower input costs, potentially averting production slowdowns in the electronics and aviation sectors. Supply-chain managers say the uncertainty of sudden tariff rollbacks, however, complicates long-term planning.
Looking ahead, both governments face pressure to find a durable resolution. U.S. chipmakers and allied industries are lobbying for stable trade rules to restore investor confidence. At the same time, Chinese officials weigh the economic pain of high-tech shortages against domestic political pressures to resist U.S. demands.
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