US-China trade war: Hong Kong businesses ‘anxious and concerned’ over impact of second round of tariffs, commerce chief Edward Yau says
Secretary for Commerce and Economic Development Edward Yau says second round of tariffs, pending approval by the United States’ Congress, would affect about HK$130 billion worth of Chinese exports to US via Hong Kong – about 2.2 per cent of city’s total exports
Almost half the Chinese exports passing through Hong Kong en route to the US would be affected by another round of tariffs in the ongoing trade war, the city’s commerce chief has said.
After meeting with major trade associations on Monday, Secretary for Commerce and Economic Development Edward Yau Tang-wah said that a second round of tariffs, proposed by the United States, would affect about HK$130 billion worth of Chinese exports to the US via Hong Kong – about 2.2 per cent of the city’s total exports.
Following tit-for-tat tariffs on US$34 billion worth of goods on July 6, the US announced a 10 per cent levy on another US$200 billion worth of Chinese goods last Tuesday, pending congressional approval.
“While no single company is being hit hard at the moment, they are anxious and concerned,” Yau said.
“A tariff of 25 per cent, or even 10 per cent, is no small sum in the cost of business. Somehow this cost will have to be passed on either to the production side or the consumer side. In any case, I think Hong Kong as a major trading centre will be hit hard. So we need to be vigilant.”
Yau said the tariffs were likely to directly affect about 0.1 to 0.2 per cent of the city’s gross domestic product, although the long-term impact remained difficult to estimate at this stage.
He said the Export Credit Insurance Corporation would help with extra coverage for exporters, while some government funds would be made available for smaller firms to ease their financing needs if banks tightened lending requirements.
Dennis Ng Wang-pun, president of the Chinese Manufacturers’ Association – one of Hong Kong’s most influential business groups – said many businesses were worried that the second round of tariffs would drive US importers of Chinese goods to other markets, leading to losses of otherwise stable orders.
“Products made in China are often not unique and many other regions can produce these products,” Ng said. “[Losing orders] is what we are most concerned about.”
Federation of Hong Kong Industries chairman Jimmy Kwok Chun-wah said the tariffs could lead to a 10 per cent increase in business costs, most of which would be passed on to US consumers.
Kwok said he hoped the government would help affected businesses seek new markets, particularly in Southeast Asia.
Yau said the government had actively explored market opportunities with the Association of Southeast Asian Nations (Asean) in the past year and signed a free-trade agreement with the nations that would take effect in January next year.
“That will immediately bring down some of the tariffs imposed on us by Asean,” Yau said. “That will offer a timely attraction to industries and investments to take advantage of Asean.”