The exemptions apply to integrated circuits, also known as microchips or semiconductors, according to the agencies. They found out about the exemptions, which have not been officially announced, on Thursday. On April 12, China raised its reciprocal tariffs to 125% for all goods originating from the United States, in response to US President Donald Trump’s move to hike levies on Chinese goods to a sky-high 145%. For months, Beijing has been projecting an air of strength and confidence in its ability to withstand an escalating trade war with the US. But these exemptions suggest it needs to roll back some levies on crucial items that it cannot make at home or source elsewhere.

Beijing's exemptions, which business groups hope would extend to dozens of industries, pushed the U.S. dollar up slightly and lifted equity markets in Hong Kong and Japan. "As a quid-pro-quo move, it could provide a potential way to de-escalate tensions," said Alfredo Montufar-Helu, a senior adviser to the Conference Board's China Center, a think tank. But, he cautioned: "It's clear that neither the U.S. nor China want to be the first in reaching out for a deal." China has not yet communicated publicly on any exemptions. U.S. President Donald Trump told TIME magazine in an interview that U.S.-China talks were taking place on tariffs, and that Chinese President Xi Jinping had called him. Beijing has so far disputed the U.S. characterization of talks.

China has quietly exempted some semiconductors from tariffs, and is considering more exclusions for certain US industries, as the world’s two largest economies attempt to navigate a trade war with potentially devastating effects, according to reports. Taxes on at least eight classifications of US microchips have been lowered to zero, a huge drop from China’s 125% retaliatory tariff on all other US goods, Caijing, a Chinese financial magazine, reported on Friday. Though the article was later deleted, two importers confirmed that certain semiconductors have been spared from the hefty duties, according to The Washington Post. Chinese officials are weighing further exemptions on medical equipment and some industrial chemicals like ethane, sources familiar with the matter told Bloomberg.