CHINESE Foreign Trade Minister Wu Yi yesterday played down the economic impact of a possible trade war with the United States. She claimed alternative markets for China's products would be easy to find. Ms Wu said other countries would welcome the opportunity to take on markets lost to US companies because of trade sanctions. 'This is nothing terrible. This is nothing we cannot deal with. There are countless markets abroad for Chinese products,' she said. On Saturday, US Trade Representative Mickey Kantor announced 100 per cent tariffs on Chinese products worth US$1.08 billion (HK$8.34 billion) if agreement cannot be reached on stamping out software, music and movie piracy by February 26. China immediately retaliated with 100 per cent tariffs on US products ranging from video games to alcohol. But Hong Kong business leaders remain cautiously optimistic that last-minute talks could avert sanctions during the 20 days left before the territory's biggest trading partners unleash sanctions that could cost the territory billions of dollars in lost exports. The Government has also urged both sides to find a way around the impasse. Experts estimate the annual cost to the territory of a trade war could be about HK$9 billion, or 0.1 per cent of the gross domestic product. Ian Christie, director of Hong Kong's Chamber of Commerce, said: 'I have a feeling they will come to a settlement. We are seeing the type of cliffhanger that happens on every occasion - with the usual bluff, bluster and rhetoric. 'There are still 20 days of braking time before we hit the buffers.' Thomas Gorman, chairman of the American Chamber of Commerce, said: 'I personally think that within the next couple of weeks we will see a reopening of talks, probably in Washington. 'My understanding is that an invitation has been extended. The signals that were coming out of Beijing during the talks both from China and the United States were very positive. I still remain cautiously optimistic.' Raymond Ch'ien Kuo-fung, chairman of the Federation of Hong Kong Industries, also expressed confidence about a successful settlement, but he added: 'However, things are more uncertain and risky as both sides are playing at brinkmanship.' Francis Lo, executive director of the Trade Development Council, said the immediate impact of the sanctions would be minimal. But he warned: 'The deterioration of US-China trade relations is worrying. We hope that it will not cause further trade problems and disruptions between the two countries, which would inevitably affect Hong Kong's trade, no matter how hard we try to minimise the damage.' Hong Kong politicians also remain confident a compromise agreement can be reached before the deadline. Legislator Jimmy McGregor said he believed the two sides would 'minimise the damage' if no solutions could be found. In Washington, the tough stance had the backing of Republican Congress Speaker Newt Gingrich. He said: 'Trade cannot be a one-way street. Either they are going to enforce the law or we should raise penalties against them until it gets too expensive.'