If you "change" his reservation, the cancellation policy does not apply at all and the new reservation will have the Strict policy applied. This is typically a loophole for a guest who wants to minimize their losses. So if his original reservation is for 5 days but he changes it to 1 day, he's only out 50% of 1 day, not 5.
What he wants to do is cancel his reservation. (HE needs to cancel it, not you and don't accept an email from Airbnb saying "is it okay to cancel" because that means YOU are cancelling and will be penalized). That means he will be out 50% of the total booking as long as he cancels before hitting the 7 day mark (he's got 3 days).
Now you could, if you want, refund him some portion of that 50% which will be paid to you by Airbnb because of your strict policy. Be aware, you are 10 days from the booking start, how much money will you lose if you cannot book any part of his cancelled trip? Right now you are only going to get 50% of those days if he cancels. But if you want, you can offer him back some or all of the money you will earn for his cancellation.
If he cancels, he will also forfeit the administration monies paid to Airbnb and he will not get them back. If he changes his reservation, that does not apply.