Highlights

• China will lower import tariffs on 935 products in 2026, including recycled lithium-ion battery materials, while maintaining export tariffs on 107 strategic resources.
• This is a calculated move to secure critical inputs rather than broad trade liberalization.
• The tariff reductions create asymmetric advantages by making China the global destination for recycled battery materials.
• This move potentially undermines Western efforts to localize battery recycling and close domestic supply loops.
• China's selective tariff policy focuses on easing imports it needs while preserving export controls.
• China is expanding 24 Free Trade Agreement (FTA) arrangements as part of this strategy.
• This fine-tuned trade management aims to fortify China's downstream manufacturing dominance as geopolitical competition intensifies.

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A Reuters report this week notes that China will lower import tariffs on 935 products beginning in 2026, including recycled “black powder” used in lithium-ion battery production, as well as select medical devices and diagnostics. On the surface, the move appears technocratic and pro-trade. For critical minerals markets, however, it raises several questions that Reuters does not address.

First, why recycled battery materials, and why now?

Lowering tariffs on black powder—a key intermediate in battery recycling—suggests Beijing is prioritizing feedstock security for its downstream battery and EV complex. China already dominates global battery manufacturing; easing imports of recycled inputs may be a way to backfill supply constraints, stabilize costs, or arbitrage Western recycling shortfalls, rather than a simple environmental gesture.

Second, who benefits—and who doesn’t?

Tariff relief applies only to imports into China. That asymmetry could reinforce China’s role as the global sink for recycled materials, while Western recyclers and automakers still face higher costs and fragmented infrastructure at home. If recycled intermediates flow more easily into China, does that undermine U.S. and EU efforts to localize battery recycling and close domestic materials loops?

Third, what’s missing from the list?

Reuters notes resource-based commodities broadly, but provides no detail on whether rare earth concentrates, oxides, or magnet inputs are included—or deliberately excluded. Rare Earth Exchanges offers links via the Chinese government below.

Finally, how does this fit with geopolitics?

The timing—amid U.S. and EU industrial policy aimed at reshoring batteries, EVs, and critical minerals—invites scrutiny. Tariff reductions may be less about openness and more about fortifying China’s downstream manufacturing advantage as global competition intensifies.

In short, this policy tweak looks small, but the signal is larger: China is fine-tuning trade tools to secure inputs where it needs them most, while keeping leverage over higher-value stages of the supply chain. Investors and policymakers should watch closely which materials qualify—and which remain off limits.

China’s 2026 Tariff Adjustment Plan (opens in a new tab) (Effective January 1, 2026)

Rare Earth Exchanges reviewed China’s 2026 tariff adjustment framework, studying how it will manage import duties, export tariffs, quota regimes, and preferential trade rates beginning January 1, 2026. The plan reflects fine-tuned trade management rather than broad liberalization, with selective easing on inputs China wants and continued controls on strategically sensitive exports.

1. Provisional Import Tariffs

China will apply temporarily reduced import tariff rates to 935 products, excluding tariff-quota goods. These provisional rates are lower than standard WTO most-favored-nation (MFN) rates, signaling targeted cost relief for selected imports deemed economically or strategically useful.

2. Tariff-Rate Quotas (TRQs)

Tariff-quota management will continue unchanged for eight categories, including wheat.

• For urea, compound fertilizer, and diammonium phosphate, in-quota imports will retain a 1% provisional tariff.
• Certain volumes of out-of-quota cotton imports will continue to face sliding-scale tariffs, preserving protection while allowing calibrated flexibility.

3. Export Tariffs

China will maintain export tariffs on 107 products, including ferrochrome and other resource-related materials.

• 68 of these items will continue under temporary export tariff rates, underscoring China’s ongoing use of export duties as a resource-management and industrial-policy tool.

4. Tariff Classification Adjustments

China will revise parts of its tariff schedule and annotations:

• Total national tariff subheadings adjusted to 8,972
• National tariff notes adjusted to 201
  

  These changes often affect how specific materials are classified, with downstream implications for compliance, cost, and trade flows.

5. Free Trade Agreement (FTA) Rates

China will continue applying preferential tariff rates under 24 FTAs and trade arrangements with 34 partners.

• Further tariff reductions will occur under FTAs with countries such as New Zealand, South Korea, Australia, Switzerland, Pakistan, and under RCEP.
• Previously completed tariff reductions under FTAs with ASEAN, Chile, Singapore, Georgia, Iceland, Costa Rica, and others will remain in force.

6. Special Preferential Tariffs for Developing Countries

• 43 least-developed countries will continue to receive zero-tariff treatment on 100% of tariff lines (quota goods receive zero tariffs only within quota limits).
• Additional preferential rates will apply to selected imports from Bangladesh, Laos, Cambodia, and Myanmar under Asia-Pacific trade arrangements.

Strategic Takeaway for the U.S. and Allies

This plan reinforces a familiar pattern: China selectively lowers tariffs on inputs it needs, preserves export controls on strategic resources, and uses FTAs to anchor regional supply chains. It is incremental, targeted, and strategic, not a shift toward across-the-board trade openness.

See Appendix 1: Provisional Tariff Rate Table for Imported Goods.pdf ; (opens in a new tab) Appendix (opens in a new tab)

https://gss.mof.gov.cn/gzdt/zhengcefabu/202512/P020251229510521217364.pdf (opens in a new tab)

Disclaimer: This press release is based on reporting and policy statements originating from Chinese government and state-linked sources as reported by Reuters. All details should be independently verified before drawing investment or policy conclusions.

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