Manufacturers in Hong Kong have been on pins and needles since US President Donald Trump threatened on Sunday to further hike US tariffs on Chinese goods.
“The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!” Trump tweeted.
He said China has been paying 25 percent tariffs to the United States on US$50 billion of high-tech goods for 10 months and 10 percent on US$200 billion worth of other goods.
He now plans to raise the 10 percent tariff to 25 percent from Friday, and a rate of 25 percent will shortly be applied to US$325 billion of additional goods from China, which remain untaxed.
Trump, in short, has dramatically increased the pressure on China to reach a trade deal.
Representatives of manufacturers in Hong Kong admitted that if his warning materializes, it will no doubt have a huge impact on local companies that have investments and factories in the mainland, the Hong Kong Economic Journal reported.
Dennis Ng Wang-pun, president of the Chinese Manufacturers’ Association of Hong Kong, said the tariff hikes in September last year were already difficult to bear, and he expressed fears that no Chinese-made goods would be shipped to the US if the new tariff hikes were implemented.
Eddy Li Sau-hung, chairman of the Hong Kong Economic and Trade Association, said he believes Trump’s warning was nothing but a negotiation strategy, although he agreed that further tariff hikes will definitely hurt Hong Kong manufacturers to a very large degree.
In July last year, Secretary for Commerce and Economic Development Edward Yau Tang-wah expected that a total of HK$83.6 billion of the mainland goods that were re-exported via Hong Kong could be affected by the 10 percent tariff imposed by the US.
Therefore, the value of goods to be affected would shoot up if US tariffs were raised from 10 to 25 percent.
Louis Chan, assistant principal economist (global research) at the Hong Kong Trade Development Council, said the fact that the US has so far not imposed higher tariffs on some major consumer items imported from China, such as toys, clothes and smartphones, indicates that Washington also has concerns about the possible recoil effects of tariff hikes on the US economy.
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