Hong Kong has no plans to hit back at US tariffs on Chinese goods, Paul Chan says

Financial Secretary Paul Chan Mo-po has stressed the importance of Hong Kong maintaining a free and open economy, suggesting there are no plans to retaliate against the latest 34 per cent tariff the US has slapped on Chinese goods even though the city strongly opposes the measure. But Chan said on Saturday that Washington’s sweeping global tariffs would affect sentiment, especially in financial markets. He added that the government already had a mechanism in place to mitigate risks. In a tit-for-tat move, Beijing said on Friday it would impose a 34 per cent tariff on imported American goods after US President Donald Trump escalated a global trade war by imposing duties on his country’s trading partners. Asked whether Hong Kong would hit back at the United States, Chan said the city’s status as a free port was a core strength that would not change. “The government of course resolutely opposes the tariff and will also come up with its own defence,” he said at an event held at the Hong Kong News-Expo. “But on the other hand, I think we should still be free and open, where the rules-based multilateral trading economy will be our core. We must maintain this.” The city was not only doing businesses with the US but also many other jurisdictions, he said. America’s new 34 per cent tariff on Chinese goods reflects a 10 per cent universal baseline, plus 24 per cent specific to the country. The 10 per cent levy came into effect on April 5, while the higher reciprocal tariff begins on April 9. When combined with the existing levies on Chinese goods, the tariffs will go up to 54 per cent. The levies also apply to Hong Kong. Chan said that the value of products Hong Kong exported to the US was small in terms of the city’s gross domestic product, with the financial hub more likely to suffer an indirect impact from the tariffs. He pointed to possible knock-on effects of an unstable global trade environment and a potential global economic slowdown. Chan said that the city’s best defence was to develop its financial markets, adding that investors from Europe and North America were the main participants locally. “If the financial markets in Hong Kong are affected, these impacts will also spill over to Europe and North America – this is not a small thing,” he said. “For us, we really hope to make our financial markets larger and larger, so that if any punches are thrown at us, the force that is redirected back will cause injuries as well.” The finance minister said the government was prepared for a range of different scenarios arising from the increased tariffs. He said authorities had set up a monitoring mechanism that aimed to identify problems, create more buffers and eventually tackle issues as soon as possible. The US is Hong Kong’s second-largest export market, accounting for US$37.9 billion in merchandise in 2024. Separately on Saturday, industry veterans called on the city’s manufacturers to hold no illusions about getting more bulk orders from the US going forward, with the escalating trade war representing a chance for them to turn into “value-adders” supporting mainland Chinese companies going global. They also encouraged their peers to turn to markets in Southeast Asia and the Middle East, issuing the call in light of the latest 34 per cent reciprocal tariff slapped by Washington on Hong Kong products. “Hong Kong was used to one business formula over the past three or four decades – we took big business orders from the US, and we manufactured them on the mainland. But now we face an irreversible change,” said lawmaker Sunny Tan, who represents the textiles and garments industry. “We should not have any false hopes that we can still get large US orders in the future.” Tan, who is also an executive deputy chairman of the Federation of Hong Kong Industries, urged local businesses to stay calm and instead step up their transformation from solely manufacturing-based operations to advanced businesses, with specialities such as supply chain management, brand design and new materials development. “We should speed up our efforts in helping mainland businesses to go abroad … playing the role of value-adder, since that would be the quickest way to generate profits under the current circumstances,” he said. The legislator was referring to the interest among many mainland enterprises, especially small and medium-sized hi-tech businesses, to expand their presence overseas. Allen Shi Lop-tak, a former president of the Chinese Manufacturers’ Association of Hong Kong, agreed with Tan’s assessment that there would be fewer large orders coming from the US in the future. He urged local businesses to explore new markets such as Asean countries and the Middle East. The Association of Southeast Asian Nations comprises the Philippines, Indonesia, Malaysia, Singapore, Brunei, Thailand, Vietnam, Cambodia, Laos and Myanmar. The veteran manufacturer called on his peers to re-evaluate the mainland market, which boasts a population of more than 1.4 billion. “As long as we can cater to a market spanning about 400 million people, that should offset the harm we will suffer from the US market,” he said. He also expressed hope that the Hong Kong government would provide more policy and financial support to manufacturers. On Wednesday, US President Donald Trump also signed an executive order closing a trade exemption known as “de minimis” – a reprieve from import duties for packages from the mainland and Hong Kong valued at US$800 or less – effective May 2. Imported goods sent through the postal network and valued at or under US$800 will now be subject to a duty rate of either 30 per cent of their value or US$25 per item, with that rate increasing to US$50 per item after June 1.

Hong Kong has no plans to hit back at US tariffs on Chinese goods, Paul Chan says

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Finance minister says city’s edge as free and open economy will remain unchanged even as Washington escalates trade war with sweeping tariffs

Finance minister says city’s edge as free and open economy will remain unchanged even as Washington escalates trade war with sweeping tariffs