China has exempted some U.S. imports from its 125% tariffs and is asking firms to identify critical goods they need levy-free, according to businesses notified, in the clearest sign yet of Beijing's concerns about the trade war's economic fallout.

Levies on certain U.S.-made microchips have been dropped, importers say. Meanwhile, China denied President Trump’s claims that talks to reduce tariffs are happening.

A Ministry of Commerce taskforce is collecting lists of items that could be exempted from tariffs and is asking companies to submit their own requests, according to a source who spoke on condition of anonymity.