Hong Kong Faces 54% U.S. Tariffs, Seeks New Trade Links

Hong Kong leader John Lee stated on Tuesday that the city would sign more free trade agreements to reduce risks amid a global trade war, calling U.S. tariffs “ruthless” and blaming them for disrupting the global economic and trade order.

“The U.S. no longer adheres to free trade, arbitrarily undermining the internationally established rules of world trade, and its ruthless behaviour damages global and multilateral trade,” Lee, who was sanctioned by the U.S. in 2020 for his role in the rights crackdown in Hong Kong, told reporters.

Carrying China’s Load

Hong Kong, as an international trade hub, will be affected by U.S. tariffs in the short term but Lee said it would continue to remain a free port, with the city not planning to impose any retaliatory tariffs on the U.S. right now.

The latest additional U.S. tariffs of 34 percent that were imposed on China also apply to Hong Kong — which is no longer considered a separate trading entity by Washington amid a years-long crackdown under a sweeping national security law.

This coupled with an earlier 20 percent tariff, means combined U.S. tariffs on Hong Kong goods are now 54%, Lee said.

Looking Elsewhere

In terms of mitigation, Lee said Hong Kong would seek to bolster trade and business linkages elsewhere including more free trade agreements in areas such as South East Asia and the Middle East. New Hong Kong trade offices would also be set up in Egypt, Turkey and Cambodia, he added.

He said Hong Kong is in negotiations for investment agreements with Saudi Arabia, Bangladesh and Peru.

“We will seize the world’s major trend of geographical diversification proactively attracting foreign companies and capital to establish Hong Kong because Hong Kong can provide security and stability to investors,” Lee said.

Hong Kong earlier pledged support for small and medium enterprises amid the current difficulties.

Slight Recovery

Hong Kong’s Hang Seng Index was up 2.5 percent in mid-morning trade on Tuesday, after suffering its biggest drop since 1997 on Monday when shares slumped 13.2 percent on fears the global trade war could trigger a recession.

On the ongoing controversy over CK Hutchison’s planned sale of its Panama ports to a U.S. group, Lee reiterated comments about the deal having to comply with local laws and regulations amid strong criticism from Chinese state media about the deal being a “betrayal” of China.

“There have been an extensive discussion with the society about the issue, and this reflects society’s concern over the matter. These concerns deserve serious attention,” he said.

The deal has highlighted perceptions of Beijing’s growing grip over Hong Kong amid growing geopolitical tensions with the U.S.

(With inputs from Reuters)