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Some economists and business leaders argue that Hong Kong needs to preserve its status as a free trade port, which is essential for maintaining its role as a key global financial center. They also urge the city not to follow Beijing’s lead by implementing retaliatory tariffs on American products.
However, Executive Council member and legislator Jeffrey Lam Kin-fung expressed a differing opinion, stating that Hong Kong ought to contemplate emulating Beijing by levying a 34 percent duty on certain U.S. goods as a sign of solidarity with "our country."
"Some goods, particularly those with readily available substitutes like food or apparel, might be subjected to tariffs. However, crucial equipment needed for medical use ought to be exempt from these charges," he stated.
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As a reciprocal action, Beijing announced on Friday that it would introduce a 34 percent duty on U.S. imports, intensifying trade frictions between the globe’s leading economic powers.
Hong Kong's second-largest export destination is the United States, with $37.9 billion worth of goods exported in 2024, representing approximately 6.5 percent of the city’s overall exports.
However, legislator Kennedy Wong Ying-ho, who represents the import-export industry, stated that Hong Kong ought to preserve its distinctive position as an open trading hub, a status upheld over numerous years. The metropolis is celebrated for its minimal tariffs, absence of trade impediments, and swift customs processing procedures, alongside having streamlined import and export regulations.
He stated that there is no necessity for Hong Kong to impose a 34 percent counter-tariff on American goods.
Wong highlighted that according to the "one country, two systems" governance principle, Hong Kong played a distinctive role due to its status as a free trade port. It operated as an independent customs territory within the framework of the World Trade Organization.
He stated that under this system, Hong Kong ought to develop its own trade policies tailored to its requirements.
Wong mentioned that Hong Kong’s designation as a free trade port has been crucial in establishing itself as a key global center for finance, trade, logistics, and tourism. He also noted that reinstating tariffs against the U.S. could impact relationships with American investors.
He stated that there’s no necessity for Hong Kong to be part of this trade war because the U.S. primarily exports services to the city via American businesses established locally, whereas the volume of imported goods remains quite small.
Hong Kong should focus on maintaining and elevating its position as a global financial hub. To achieve this, it’s essential to keep strong ties with American fund managers, as they contribute significantly by bringing substantial capital and asset management operations into the city.
Gary Ng Cheuk-yan, a senior economist at Natixis Corporate and Investment Bank, agreed, saying it would be "unwise and unnecessary" for Hong Kong to follow in the footsteps of Beijing.
He noted that all US goods imported into China through this city would similarly face a 34 percent tariff.
Ng also stated that implementing tariffs on the US by Hong Kong could have adverse effects since consumers may encounter increased costs for crucial medical supplies and medications.
Hong Kong is a small, open economy lacking the political clout to negotiate effectively with the U.S. If this move is intended solely as a political statement, it could backfire, leading to adverse effects by exacerbating geopolitical complexities,” he stated.
Instead, Hong Kong should make use of its free trade port status to provide a buffer zone to ease the tensions between the US and China, Ng said.
Last year, Hong Kong reported $37.9 billion in goods exported to the U.S., along with $26.4 billion imported from it, leading to a trade surplus of $11.5 billion. Additionally, the United States constituted 4.2% of Hong Kong’s overall imports, ranking as its sixth-largest source of imports.
Based on governmental statistics, the category of "telecommunications equipment and parts" led as the foremost commodity imported from the United States into Hong Kong during the previous year with an amount totaling $4.8 billion.
Following this were semiconductors, electronic valves, and tubes totaling $3.5 billion, as well as pearls, precious, and semi-precious stones amounting to $2.66 billion. Items categorized under works of art, collector’s pieces, and antiques amounted to around $2 billion. Engines and motors, excluding electric ones, along with their parts took the fifth spot at approximately $1.9 billion.
Simon Wong Ka-wo, president of the Hong Kong Federation of Restaurants and Related Trades, stated that the United States is not a primary supplier of food and beverages to the city, and therefore these products can easily be substituted should prices become excessively high.
"Approximately 68 percent of Hong Kong’s total food supply comes from mainland China, with the remainder sourced globally. Foods originating from the United States account for less than 10 percent," stated Wong.
Should tariffs increase the costs, alternative solutions are readily accessible. This isn’t a significant issue.
He mentioned that typically, only upscale eateries or luxury accommodations would opt for U.S. imports due to their premium cost.
Several widely favored American food and beverage items consist of beef, wine, nuts, fruits, lobsters, and eggs; however, consumers might opt for goods originating from Europe, Canada, or Australia as alternatives.
He noted that eateries and beverage establishments in the city would probably refrain from stocking U.S. products in the near term to dodge possible tariffs down the line. This avoidance stems not just from the perishability of these items but also due to the rapid shifts in market preferences and consumer tastes.
The economist Simon Lee Siu-po argued that Hong Kong ought to seek exemptions from Beijing’s retaliatory measures and maintain its position as a distinct customs territory.
He concurred that such a step would be without precedent if Hong Kong were to introduce tariffs, potentially leading to extensive consequences.
"The harm caused to our economy by the 'zero Covid policy' was evident," he stated.
Hong Kong needs to carefully consider its identity and role within the global economic landscape. If tariffs were introduced, businesses from various nations may reassess whether Hong Kong holds distinct advantages over other Chinese urban centers.
If Hong Kong wishes to mitigate the possible effects of the tariff dispute, the U.S. has stated that the city should preserve its free-trade standing similar to how it employs the common law framework.
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The article initially appeared on the South China Morning Post (www.scmp.com), which serves as the premier source for news coverage of China and Asia.
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