It seems like China has quietly removed the 125% retaliatory tariffs on certain U.S.-made semiconductors, according to information shared with CNN on Friday by three import agencies in Shenzhen, a key tech hub in southern China. This move is part of Beijing's effort to ease the impact of the ongoing trade war on its crucial technology sector. The exemptions apply to integrated circuits, also known as microchips or semiconductors, as confirmed by the agencies. On Thursday, they learned about these changes, which haven’t been officially announced. On April 12, China increased its retaliatory tariffs to 125% on all U.S. goods in response to U.S. President Donald Trump’s decision to impose a massive 145% tariff on Chinese imports.

For months, Beijing has projected an image of strength and confidence in its ability to handle the growing trade war with the US. However, the recent exemptions indicate that China needs to reduce some tariffs on essential items it can't produce domestically or find elsewhere. In addition to semiconductors, China has also decided to lift tariffs on specific aircraft components, such as engines and landing gear, as noted by an aviation executive. Semiconductors are crucial for almost every electronic device. They are expensive to build and require specialised knowledge, so a few suppliers dominate their production.

While China has progressed in developing its semiconductor industry, it still heavily relies on chips and manufacturing equipment imports from the United States, Taiwan, South Korea, Japan, and the Netherlands. According to customs data, China imported $11.7 billion of semiconductors from the U.S. in 2024.

The chairman of the technology investment advisory firm BDA, Duncan Clark, stated that the exemptions indicate China does not have “autonomy in chips.” He added, “It has ambition for that. But basically, it’s going to be a while before it can be fully autonomous.”

Ray Wang, a Washington-based analyst specialising in U.S.-China tech competition, stated that the exemptions benefit American chipmakers like Intel, Texas Instruments, and Global Foundries, which Chinese tariffs would impact. Chinese authorities have not publicly confirmed the semiconductor exemptions. The General Administration of Customs and customs offices in Shenzhen and Zhongshan, two port cities in Guangdong province, stated they were unaware of the exemptions. When asked about the exemptions during a regular news briefing on Friday, a spokesperson for China’s Foreign Ministry said he was unfamiliar with the matter. CNN has contacted China’s Ministry of Commerce for further clarification.

Chen Shaoling, a manager at Zhengnenliang Supply Chain, an import agency, told CNN that she discovered on Thursday that tariffs on eight types of integrated circuits, covering most semiconductors except memory chips, had been reduced to zero. She found a routine customs clearance for her clients. “We only found out after we filed the declaration — without doing that, we wouldn’t have known,” Chen stated. “The news is now spreading like wildfire.”

On Friday, Caijing, a Chinese business magazine, reported on the semiconductor exemptions, quoting several tech companies that import semiconductors, including one in Shanghai. However, the article was taken down about three hours after being published. This isn't the first time China has supported its tech industry, which has been strengthening ties with the government following a lengthy period of regulatory crackdowns. Earlier this month, China lifted tariffs on chips designed by American companies but manufactured outside the nation. For instance, Taiwan Semiconductor Manufacturing Company (TSMC) mainly produces U.S. AI chip leader Nvidia products in Taiwan.

On April 11, the China Semiconductor Industry Association, backed by the state, stated on social media that a product's "declared country of origin" should be where its factory is located and where it was made. This means that semiconductors from U.S. chip designers like Qualcomm and Nvidia, produced outside the U.S., would not be subject to China’s 125% tariff on U.S. goods.

The recent exemptions apply only to logic chips, which manage and control data flow, an area dominated by the U.S. However, these exemptions do not include memory chips, which store and retrieve data. South Korean companies Samsung and SK Hynix are the leading companies in this sector. The local customs authority in Shenzhen has informed some companies about this change.

On Thursday, Shenzhen HJET Supply Chain shared exciting news on its official social media account, stating, “Fantastic news! We have received a new notice from China Customs, stating that eight tariff codes related to semiconductors/integrated circuits are now exempt from additional tariffs on US imports.” The post continued, “This means that imports originating from the United States under these codes will have their tariffs reduced to zero upon entry into China.”

A company employee who answered CNN's call confirmed the new policy, stating that local customs informed her company on Thursday. Taihang Semiconductor, a Shenzhen-based company that imports chips, notified CNN that it had obtained a notice from customs but chose not to share additional details. When contacted by CNN, a staff member said, “It’s definitely a good thing.” 

According to Safran CEO Olivier Andries, China is offering exemptions in sectors like aviation, beyond just semiconductors. On Friday's earnings call, he said, “Yesterday night, China has decided to exempt from tax any deliveries of engines, nacelles, landing gears or parts.”

The company plays a key role in supplying China’s aviation sector, producing oxygen systems and nacelles (the parts that house the engines and attach them to the wings) for the C919, China’s first domestically developed passenger aircraft. CFM, a joint venture between U.S. engine maker GE Aviation and Safran, makes the C919’s LEAP-1C engines. Reuters, citing an anonymous source, reported that the Chinese government is also asking businesses to identify products that could be eligible for exemptions from its retaliatory tariffs on the U.S. The ongoing tariff dispute between the world’s two largest economies has caused significant market turmoil, disrupted supply chains, and raised concerns about a potential recession.

On April 11, Trump exempted electronics like smartphones and computers from his reciprocal tariffs, significantly affecting tech giants such as Apple, which manufactures iPhones and other products in China.

Recently, Trump has toned down his stance, stating that the massive tariffs on Chinese goods will “come down substantially” and promising to be “very nice” during trade talks as he tries to get Chinese leader Xi Jinping to make the first move. However, Beijing has dismissed Trump’s apparent gesture, insisting that the US must remove all tariffs on China if it wants to engage in talks. Chinese officials have also consistently denied Trump’s claims that the two sides are in trade discussions.

“There have been no negotiations between China and the United States on the issue of tariffs. The US should not mislead the public,” said Guo Jiakun, a spokesperson for the Chinese Foreign Ministry, during a regular news conference on Friday. This response followed Trump’s statement on Thursday, where he mentioned that his administration had met with Chinese officials earlier that morning regarding trade.