US business lobby in China: Some pharma firms reporting tariff exemptions

Pharmaceutical companies in China are reporting that they have been able to import some drugs over the past week with tariff exemptions, the Beijing-based American Chamber of Commerce said on Friday.

The move, if confirmed, could be a sign that Chinese authorities are prepared to be flexible to try to mitigate the impact of an ongoing U.S.-Chinese trade war. China's commerce ministry did not immediately respond to a request for comment.

"Anecdotally, companies are reporting that they are able to bring in some items without tariffs," Michael Hart, the chamber's president, said during an online press conference in Beijing.

Asked by Reuters after the event if he could specify which sectors those companies came from, he said: "It's pharmaceutical firms on the exemptions, but I believe it is drug-specific and not a sector-wide exemption."

China imposed 125% tariffs on U.S. products after U.S. President Donald Trump singled out China for even higher levies when he paused import tariffs on dozens of other countries.

Popular Western medicines for diseases including cancer and diabetes have been caught in the escalating trade war.

Separately on Friday, some businesses said that China had exempted some U.S. imports from tariffs and was asking firms to identify key goods that they needed levy-free, in a sign of Beijing's concern about the economic consequences of the trade dispute.

The Chinese tariffs have led big drugmakers including Johnson & Johnson and Merck, known as MSD outside the United States and Canada, to predict cuts to profit. Johnson & Johnson and Merck have at least one U.S. manufacturing site for their medicines for the China market, a Reuters review of Chinese regulatory data shows.

Medical equipment supplier and pharma services outlet Thermo Fisher Scientific also said on Wednesday it estimated a $400 million hit this year to its sales in China, which represents about 8% of its business.

A source from a European maker of medical equipment said negotiations were underway with the Chinese government about tariffs exemptions. "There are some results, but talks are not concluded," the source said.

"Many Chamber members operating in the pharmaceutical sector have production sites in the U.S., which produce for global markets, including China, and/or export APIs (active pharmaceutical ingredients) from the U.S. to China, which will be impacted by the tariffs," Jens Eskelund, president of the European Union Chamber of Commerce in China, told Reuters.

Eskelund said that due to tariffs such companies would have a choice between absorbing cost increases themselves or increasing product prices. Those whose products are part of China’s National Reimbursement Drug List or bulk buy procurement programme would effectively need to bear the costs of tariffs themselves.