Latest rounds of US-China trade war leave Hong Kong business leaders fearing there is no end in sight to dispute
Support measures for local firms will be stepped up in light of new tariffs
Hong Kong business leaders fear there will be no end to the trade war between the world’s two biggest economic powers, with the government rolling out more support measures to help companies.
Secretary for Commerce and Economic Development Edward Yau Tang-wah said on Wednesday that the US-China trade war had escalated to “a new level” and promised to keep up dialogue with business chambers and increase insurance coverage and credit support for Hong Kong firms.
Still, the city’s traders would get a temporary breathing space after US President Donald Trump on Monday announced a 10 per cent tariff would be levied on Chinese imports worth US$200 billion annually, beginning next Monday, with the levy rising to 25 per cent on January 1.
That followed two previous rounds of 25 per cent tariffs on shipments worth US$50 billion a year.
In a tit-for-tat move, China’s Ministry of Finance said on Tuesday that a 5 to 10 per cent levy would be imposed on US$60 billion worth of American goods.
As a result of all the tariffs, 48.5 per cent of Chinese goods shipped via Hong Kong to the US would be affected, Yau said after attending an urgent meeting with leaders of the city’s business chambers.
“The scope of goods in the latest round of tariffs is wider, and more sectors are affected,” Yau said.
That was despite the product list of goods affected being cut by 286 items to 5,745 after a public comment period in the US.
Seafood, vegetables, nuts, fruits, grains, jam, peanut butter, tobacco, chemicals, car parts, textiles and garments, vehicles, batteries and furniture were on the list while smartwatches and Bluetooth gear, among others, were removed.
Some exporters said Trump’s decision to implement a lower tariff until the end of the year was to minimise the impact on US retailers during the big shopping season between Thanksgiving and Christmas.
Trump warned on Tuesday of “great and fast economic retaliation against China” if Beijing targeted American farmers, ranchers or industrial workers.
Hong Kong General Chamber of Commerce chairman Aron Harilela said Trump’s strategies were causing uncertainty.
“The Trump administration has an economic agenda, but it also has a political agenda, and the problem with such a combined agenda is we cannot see the end of this trade war,” he said.
“Hong Kong companies are caught in the crossfire of the two economic giants.”
The Hong Kong Export Credit Insurance Corporation introduced extra measures on Tuesday, including offering a deeper 30 per cent discount on premiums for small business policyholders compared with 20 per cent previously.
Small business policyholders would have a bigger credit limit on US importers, as it was raised 20 per cent to HK$5 million (US$641,000).
Hong Kong Productivity Council chairman Willy Lin Sun-mo said some Hong Kong manufacturers in mainland China were racing to deliver products by air ahead of the tariffs on Monday.
Federation of Hong Kong Industries chairman Jimmy Kwok Chun-wah urged local companies to diversify further into markets in Asean countries as the government had called for.
The 10-member Association of Southeast Asian Nations economic bloc has a bilateral free trade agreement with Hong Kong.
The escalating trade war prompted the government’s trade promotion body, Hong Kong Trade and Development Council, to downgrade its forecast for the city’s exports growth to 3 per cent this year from 6 per cent previously. It said electronics, clothing and jewellery were among sectors with the biggest concerns about a slowdown.