Next lot of tariffs in China-US trade row will hit Hong Kong harder, minister warns

Wide range of goods including food will be affected if trade war escalates, Edward Yau says

PUBLISHED : Thursday, 12 July, 2018, 7:03am
UPDATED : Thursday, 12 July, 2018, 11:23pm

Hong Kong, which is an export-oriented port, will be “hit harder and more imminently” in a fresh and escalated China-US trade row, the secretary for commerce and economic development has warned.

From food to clothes, the list of consumer goods and the magnitude of tariffs were worries facing the city, Edward Yau Tang-wah told the Post after meeting on Tuesday with about 10 Hong Kong business chambers at the government headquarters in Admiralty.

He said they were already concerned about their business orders in the second half of this year after the US$34 billion trade sanctions took effect last Friday.

“The common worry is what happens next is going to hit us harder because it covers more consumer goods such as textiles, garments, food and electronics [and so on],” Yau said on Wednesday. “This effectively means basic industries involving clothing, food, living will be affected more imminently.”

But he stopped short of estimating the impact on Hong Kong of the US plan announced on Wednesday to levy 10 per cent tariffs on US$200 billion worth of Chinese products.

Beijing vowed to retaliate, warning that the escalating confrontation risks “destroying” trade between the two countries.

“I won’t jump into any assessment at this point because it is still a proposed list which will be announced after public hearings in late August,” Yau said.

Yau said business chambers would not immediately feel the impact of the 25 per cent tariffs China imposed on US$34 billion American goods in a tit-for-tat move to a similar US levy. The Hong Kong exports in question accounted for 1.4 per cent of the city’s overall trade, he added.

But the impact of the proposed levy would be more immediately felt because they would be finished goods, he said.

China stocks, currency and metals tumble after US fires up trade war

“We will closely look at this and see how things play out,” Yau said.

Willy Lin Sun-mo, chairman of the Hong Kong Productivity Council and of the Hong Kong Shipper’s Council, took part in Tuesday’s meeting and said smaller firms risked becoming a casualty of the trade war.

“Larger Hong Kong companies operating across the border have set up offshore factories, such as in Vietnam, but many small and medium size enterprises have not and are still solely producing in China,” he explained.

Lin added that US president Donald Trump, himself an entrepreneur, appeared to be applying his business strategies in trade policy. Lin believed this was inappropriate.

“He appears to be making the US the only winner,” he said. “But the trade war will hurt everyone.”

Hong Kong-based Johnson Electric Holdings, which makes electric motors and motion subsystems in mainland China and Mexico, estimated products amounting to less than three per cent or US$97 million (HK$755 million) of its annual sales, would be subject to extra 25 per cent tariffs the US imposed on Chinese exports.

To help ease Hong Kong traders’ burden, the Hong Kong Export Credit Insurance Corporation rolled out enhanced measures for SMEs. It doubled the number of free credit assessments from three buyers to six for each Hong Kong exporter and offered free additional shipment cover for those affected by the US tariff measures. These arrangements will stay in place until the end of this year.

Yau said the corporation and Hong Kong Trade Development Council would organise talks to advise businesses on the latest information and evaluate trade situations.