China throws trade war tariff exclusion lifelines that it thought it would never need

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When officials in Beijing started consulting lawyers six months ago about protecting Chinese industries from potential tariffs on imports from the United States, they were not certain they would have to act on the advice.

According to a source familiar with the consultations, senior officials within the government “really thought the tariffs would go away”.

But then on Monday with China’s announcement of extra tariffs on US$60 billion in US imports there was a sign that a line had been crossed – for the first time the government offered a tariff exclusion process.

“It is a sign that things are probably going to be going on a little bit longer from the top down than they thought,” the source said.

The process is largely based on a similar programme in the US and allows tariff-affected firms in China to apply for an exclusion.

The Chinese exclusions are a lifeline to key industries that Beijing wants to protect from the turmoil of the trade war. Given that importers must pay the extra duties themselves, offering exemptions to those that cannot afford the tariffs makes economic sense, according to analysts.

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