Hi,
Which version of Exchange do you use?
Yes, retention policy will be automatically inherited down to all subitems and subfolders. If you don't want the subfolders to be inherited by the retention policy, you can try to create a personal tag with retention disabled and apply it to the subfolders.
See this blog article for more details: https://blogs.technet.microsoft.com/vikass_blog/2013/12/03/can-i-block-subfolders-from-being-processed-by-retention-tags/
Since this forum focuses more on questions and feedback related to Microsoft Office desktop applications, if you would like further assistance on this issue, I'd recommend you post a new question to the dedicated Exchange forum:
https://social.technet.microsoft.com/Forums/office/en-us/home?category=exchangeserver
Thank you for the understanding and support.
Regards,
Steve Fan
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