US-China trade war will benefit Southeast Asia, Hong Kong shoppers as exporters seek new markets, California official says

Shoppers in Southeast Asia and Hong Kong have emerged as beneficiaries of the raging US-China trade war as American exporters seek alternative ways to sell food and fruits, according to a California trade official.

As a spillover effect of the tit-for-tat spat involving billions of dollars of trade, Jeffrey Williamson, director of the government-backed California State Trade Expansion Program, said on Thursday US exporters would explore markets they did not pay much attention to previously. For example, American cherries sold in Hong Kong this month were about 10-20 per cent cheaper than last summer.

Still, many American exporters, which count mainland China as their biggest market, did not want to give up the trade and were seeking to get around the hefty tariffs through e-retailing, he said.

“China is still the biggest market for many California exporters, how can you ignore it?” Williamson said on the sidelines of the Food Expo, a five-day trade show in Wan Chai.

“Nobody wants to pay more for the same thing they paid for six months ago. Innovation is key for the future, it is a lesson for everyone.”

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The United States fired the first shot of the trade war in June when its decision to levy a 25 per cent tariff on US$34 billion (HK$265.2 billion) worth of Chinese goods took effect. In a tit-for-tat move, China imposed the same extent of tariffs on an equivalent mount of American goods.

The US then proposed to impose a 10 per cent tariff on US$200 billion worth of Chinese products, pending a congressional hearing on August 20. On August 23, a 25 per cent tariff on another US$16 billion worth of Chinese goods would come into effect.

US President Donald Trump threatened to raise the total value of goods with tariffs to US$500 billion.

“We do not like it,” Williamson said. “Products are blocked for political reasons.”

China and Hong Kong are California’s biggest trading partner and imported a combined US$28.5 billion in products from the Golden State last year, or about 16.5 per cent of its total exports of US$172 billion.

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While anticipating the trade war would continue for some time, Williamson said Californian exporters could turn to such online platforms as Alibaba and JD.com for distributing goods in China.

Alibaba owns the South China Morning Post.

“Tax on online shopping is considerably lower in China, which effectively means the total tax including the tariffs could be the same as that of traditional imports,” he said.

Helen Chan, an exporter from California’s century-old Emilio Guglielmo Winery, said the company fell victim to the trade war as red and white wines were subject to as much as 88 per cent levies. She sold 85 per cent of the wine to China.

“We are testing the Hong Kong market for our Christmas wine for the first time,” she said, in a move to diversify from the mainland market. “But we cannot switch market overnight.”

A distributor of an American brand of jam and peanut butter said the company feared it would not escape unscathed from the trade war, which would sour shoppers’ appetite.

“The trade war will hurt economic growth, which in turn hurts consumers’ spending desire,” the distributor who spoke on condition of anonymity, said.