Donald Trump’s escalating trade actions are increasingly blurring the distinction between Hong Kong and mainland China, a shift that threatens the city’s standing as a key global financial hub. This week, Trump’s imposition of a 10% tariff on Chinese imports marked the first time that Hong Kong goods were subject to such a levy, following an executive order in 2020 that removed the city’s special trading privileges. Just a day later, the US Postal Service briefly banned incoming parcels from China, including shipments from Hong Kong, before reversing the decision hours later.
Thousands of miles away, the Trump administration is exerting pressure on Panama to sever ties with a Hong Kong-based conglomerate, citing national security concerns linked to the company’s alleged Beijing loyalty. Trump has falsely claimed that Panama’s famed canal is operated by China and controlled by its military.
This apparent disregard for the distinction between Hong Kong and mainland China is undermining the efforts of Hong Kong’s Chief Executive John Lee, who is trying to restore the city’s image as a stable business environment. This follows a mass talent exodus fueled by Beijing’s strict crackdown on dissent and the city’s strict Covid measures. Despite President Xi Jinping’s calls for Hong Kong to maintain its unique identity, the city’s tightening control under Beijing has narrowed its differences from mainland China.
“If Hong Kong is increasingly treated the same as China, its international role and status could be in jeopardy,” said Dongshu Liu, an assistant professor at the City University of Hong Kong. “This is a concerning trend.”
While economists predict that the impact of the US tariffs on Hong Kong’s economy will be minimal, as they apply to local manufacturing rather than re-exports, the broader implications for the city’s businesses are more troubling. The imposition of tariffs on Hong Kong goods and the conflation of the city with mainland China reflect fresh geopolitical risks for companies operating in Hong Kong, which was once viewed as a neutral space for international business.
In a statement, the Hong Kong government condemned the tariffs and the temporary suspension of postal shipments, warning of potential World Trade Organization action if the US does not reverse its stance. The government also confirmed that, despite the tariff rollback, Hong Kong Post would continue suspending US-bound packages due to Washington’s shifting policies.
The city is also bracing for potential fallout beyond trade. The national security case of media mogul Jimmy Lai, facing a possible life sentence under Hong Kong’s Beijing-imposed security law, is set to be decided soon. A conviction could drive a further wedge between the US and China and risk retaliation against Hong Kong.
Trump’s campaign for Lai’s release has sparked tensions, with Hong Kong lawmakers, including Regina Ip, pushing back against the US’s demands. She emphasized that Hong Kong should assert its distinctiveness from China while questioning the US’s understanding of the city’s unique status under the “one country, two systems” framework.
During his first term, Trump signaled a shift in US policy towards Hong Kong, warning that the city’s special treatment would diminish under China’s tightening control. He moved to impose export restrictions on sensitive technologies, equating Hong Kong with mainland China in trade matters. These actions followed Beijing’s imposition of the controversial national security law, which led to the revocation of Hong Kong’s special trading status.
Trump’s stance reflects a broader shift in US government and business attitudes, according to Victor Shih, a political science professor at the University of California, San Diego. “As the legal system in Hong Kong and mainland China converges, it is natural for people to treat them as one,” he said.
For businesses in Hong Kong, the political pressure on multinational companies, like CK Hutchison Holdings Ltd., underscores the risks of operating in a city now increasingly entangled with China’s political landscape. This could deter investment, particularly in strategic assets, as the US and China vie for global influence.
While Hong Kong seeks to diversify its economic ties, particularly with the Middle East, the city’s international reputation has been further tarnished by its increasing association with mainland China. The political climate in Washington has become more stark: businesses must align with the US or face harsh consequences, according to Steve Tsang, director of the SOAS China Institute at the University of London. “You’re with us or against us,” he said. “And if you’re against us, expect no mercy.”
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