Hong Kong won't be immune from China-US trade war

April 11, 2018 10:22
Hong Kong's exports largely comprise re-export of products made in China. Photo: Reuters

US President Donald Trump has threatened to impose retaliatory tariffs on up to US$60 billion in Chinese imports to punish China for intellectual property infringement. In response, Beijing said it would levy 25 percent tariff on a range of American goods including cars and soybeans.

Washington hit back with a levy on additional US$100 billion worth of Chinese imports. The trade row between the world's top two economies has prompted sharp selloffs on global stock markets recently.

If there is a full-blown US-China trade war, will Hong Kong be immune from that?

The majority of Hong Kong manufacturers had moved their factories across the border more than two decades ago. Those operations will certainly be affected.

I've heard that that some American customers have requested Hong Kong companies to move some, if not all, of their production lines out of mainland China to avoid the tariff issue.

Some of the buyers even started to look for alternative supply sources in other countries.

Meanwhile, most of Hong Kong's exports are, in fact, re-export of products produced by mainland makers.

I believe exports to US in the second half of this year will be negatively affected to some extent. This could be a wakeup call for exporters to prepare for the worst and actively seek clients from other countries.

This article appeared in the Hong Kong Economic Journal on April 10

Translation by Julie Zhu

[Chinese version 中文版]

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Hong Kong Information Technology Federation honorary chairman