China-US relations

Hong Kong condemns US plan to impose tariffs on aluminium and steel as ‘discriminatory act’

Officials and industry members slam the move by the US to impose steep penalties on imports as the city gets pulled into an impending Sino-US trade war

PUBLISHED : Tuesday, 27 February, 2018, 9:42pm
UPDATED : Friday, 23 March, 2018, 12:05pm

Hong Kong’s government and industry players lashed out on Tuesday at Washington’s plan to impose heavy tariffs on aluminium imports from mainland China and the city, which has been dragged into escalating Sino-US trade tensions.

Secretary for Commerce and Economic Development Edward Yau Tang-wah slammed a proposed 23.6 per cent tariff targeting the city, saying the government had voiced its opposition to the US consul general.

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“The Hong Kong government disapproves of this proposed action by the US government. We consider this is a unilateral and discriminatory act which is based on unfounded allegations,” Yau said.

A source told the Post that Yau on Monday met with members of five industry groups as well as officials at the American Chamber of Commerce in Hong Kong to register concerns over the tariff increase.

The American chamber said on Tuesday that the issue was of “mutual concern” and it would maintain communication with the city government. It also said it was “concerned” about the effects on US-Hong Kong trade relations and hoped to see the government “step up its efforts to engage with officials in Washington” to promote its “unique role” in the region for American business.

A February 16 report by the US Department of Commerce suggested imposing the 23.6 per cent tariff on aluminium products from Hong Kong and mainland China and three other countries. The department also called for a 53 per cent tariff on steel products from China and 11 other countries, saying the import of foreign metals threatened the viability of US manufacturers.

The move was considered by analysts to be the first salvo in an impending trade war between the US and China, and came at a time when Xi’s top economic envoy, Liu He is in the US for trade talks.

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Yau said Hong Kong’s export of aluminium products was about US$30 million (HK$234.9 million) in the first 10 months of last year, which accounted for less than 0.2 per cent of the total import of such products in the US.

Tensions over Sino-US trade have escalated since late last year, especially in January when Beijing revealed its record trade surplus with Washington, at US$275.8 billion last year, an 8.6 per cent rise from 2016 or about 65 per cent of China’s total global trade surplus.

The US Department of Commerce claimed that a US$55 million trade deficit from aluminium products existed between Washington and Hong Kong from business conducted during January to October 2017. It blamed the imports for negatively affecting the economic welfare of relevant industries in the US and threatening national security.

Five major Hong Kong trade bodies collectively rejected the planned tariffs, which they described as “unfair and discriminatory trade arrangements towards individual countries or regions”.

Among the groups accusing the US government of violating free trade were the Federation of Hong Kong Industries, the Chinese Manufacturers’ Association of Hong Kong, the Hong Kong General Chamber of Commerce, and the Hong Kong Chinese Importers’ and Exporters’ Association.

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“The [associations are] concerned that this may lay down a precedent for the US and to use this in the future as an excuse to introduce similar unfair trade measures on other imports,” they said in a statement urging the Hong Kong government to “contemplate follow-up actions”.

Raymond Yeung, a chief economist with ANZ bank, said the US decision to put Hong Kong, an independent member of the World Trade Organisation, and mainland China on the same list was to plug loopholes.

If Hong Kong was not on the list, Yeung said, more aluminium products might be exported via the city through “policy loopholes”.

Danny Lau Tat-pong, an official with the Hong Kong Small and Medium Enterprises Association who owns an aluminium manufacturing plant on the mainland, said it was inevitable that Hong Kong would be dragged into the Sino-US trade tensions.

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Aluminium products from Hong Kong and mainland China cost half as much as US-made products, Lau said, making them less competitive.

The US consulate did not reply to requests for comment.