The exemption will take effect on September 17 and be valid for a year through to September 16, 2020, it said.
After months of an escalating tit-for-tat tariffs battle, the exemptions will cool tensions ahead of low-level discussions due to begin in the coming weeks.
"The exemption could be seen as a gesture of sincerity towards the US ahead of negotiations in October but is probably more a means of supporting the economy", ING's Greater China economist Iris Pang wrote in a note.
A list of 16 items including lubricants, fish meal for animal feed and some other chemicals will be exempt from penalties of up to 25% imposed in response to Trump's tariff hikes on Chinese products, the Ministry of Finance said.
In their latest escalation, Washington imposed 15% tariffs on $112 billion of Chinese imports on September 1 and is planning to hit another $160 billion December 15. That will be applied to the products subject to additional tariffs on US$60 billion of American goods.
Xi further complained to Abe that while the Trump administration has repeatedly criticized Beijing for supporting state-owned companies with subsidies, "the U.S.is also providing Boeing with subsidies", referring to the Chicago-based US airplane manufacturer. China has announced some US industrial chemicals will be exempt from tariff hikes imposed in a trade war with Washington but maintained penalties on soybeans, pork and other farm goods.
Only 16 items are exempt from extra tariffs of 25%.
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Preliminary meetings are set to take place later this month in Washington before U.S. treasury secretary Steven Mnuchin and trade representative Robert Lighthizer meet China's vice premier Liu He in October.
Wednesday's announcement comes before Chinese trade deputies are expected to meet with their USA counterparts in mid-September in Washington. Is this a concession to the United States ahead of the October trade talks?
For two years, the Trump administration has sought to pressure China to make sweeping changes to its policies on intellectual property protection, forced transfers of technology to Chinese firms, industrial subsidies and market access.
Although Abe told Xi that Trump trusts the Chinese president, Xi continued to air his grievances about his US counterpart, the diplomatic source told Kyodo News.
Trump has imposed or announced penalties on about $550 billion of Chinese products, or nearly everything the United States buys from China.
But senior White House adviser Peter Navarro tamped down expectations for the next rounds of trade talks, urging investors, businesses and the public to be patient about resolving trade dispute.
Goods on the second list won't be eligible for tariff refunds, the Chinese Finance Ministry said.