How will Hong Kong be affected by Donald Trump’s threat of extra US$100 billion in punitive tariffs?
Commerce minister identifies three areas that may indirectly affect Hong Kong, while economist describes Trump’s actions as ‘all sizzle and no steak’
Hong Kong could be indirectly affected by a further US$100 billion tariffs on Chinese imports, the city’s commerce minister has said, after US president Donald Trump threatened to escalate the trade war on Friday morning.
Secretary for Commerce and Economic Development Edward Yau Tang-wah identified three areas where Hong Kong could be hit by the new proposals: entrepot trade, investment in Chinese-made products and the financial market.
Trump accused China of “unfair retaliation” after Beijing put a 25 per cent tariff on 106 US products including soybeans, pork and aircraft, in response to US steel and aluminium tariffs that took effect last month.
While the list of products affected by the newly proposed tariffs is yet to be published, many expect it will target tech products.
In terms of entrepot trade, Yau said Hong Kong re-exported about HK$60 billion (US$7.64 billion) worth of products last year that might come under the new tariff.
It amounts to about 20 per cent of the total value of products China exported to the US via Hong Kong, he said.
Yau believed the tariff could also affect Hongkongers’ investment in relevant products manufactured on the mainland.
“But this is harder to estimate, as the list involves more than 1,000 [products],” he said, adding that officials were communicating with various chambers to learn of the actual impact.
“At first glance, it is not as big as we expect.”
Hong Kong’s financial market could also be affected, as Yau described China and the US as the city’s “closest trading partners”.
Despite the impending impact, Yau admitted local officials had a limited role. Unlike the tariffs on aluminium that applied to Hong Kong, the newly proposed tariffs target only products from mainland China, he said.
“[The new tariffs] are between China and the US, strictly speaking. I don’t have a place to be directly involved.”
The Hong Kong government would continue to communicate with chambers of commerce in its own city and the US, he added.
Economist Andy Kwan Cheuk-chiu, who directs the ACE Centre for Business and Economic Research in Hong Kong, characterised Trump’s threats as “all sizzle and no steak”.
“Trump’s aim is to force China to the table,” Kwan said in the same programme.
Trump was making a “political gesture” to appease his voters who may have been hit by Beijing’s tariffs on American products, he added.
The economist also said he expected China to continue with “tit-for-tat” retaliations.