Thriving new markets can help shield the Special Administrative Region from excessive US import tariffs — as should its decision to not take retaliatory measures
By Adrian Bebbington Wong
Nearly all economies globally face a common challenge: escalating US protectionism.
Trade tariffs have become a blunt geopolitical instrument, wielded by Washington to unprecedented effect. At the time of writing, exports from both Hong Kong and mainland China to the US are subject to a tariff of 145%, and while Beijing has responded with its own tariff rate of 125%, the Special Administrative Region plans to not impose any tariffs on US imports. This is significant.
The claim that the US was exploited by trade partners does not hold up under scrutiny. Historically, advanced economies outsourced manufacturing to China precisely to leverage its low-cost labour, earning higher margins on goods made there. Now, as production shifts to Vietnam and India, this narrative ignores how US retailers marked up Chinese imports.
The US trade deficit fixation focuses narrowly on goods, obscuring its dominance in services. Last year, America’s trade surplus in services was US$293 billion, up 5% from 2023 and up 25% from 2022, according to U.S. Department of Commerce, driven by financials (35%), IT (28%), and entertainment (12%).
As governments reassess their exposure to US market risks, regional trade alliances gain urgency. For Hong Kong, this disruption may be a blessing in disguise.
Superconnector comes into play
Hong Kong’s edge is clear: it is uniquely positioned to solidify its role as a superconnector, bridging Europe, ASEAN, and China. For businesses and professionals alike, the city remains a compelling hub, offering an exceptional quality of life, world-class infrastructure, a competitive tax regime, and cosmopolitan energy.
In 2023, Hong Kong’s total services exports reached US$762.2 billion (up by 17.2% from 2022). Transportation services constituted the largest export component at 30.8% of total services exports, followed by financial services (25.7%) and travel (21.4%).
Mainland China (29.8%) and the US (19.2%) were Hong Kong’s top two services export destinations, with the UK (10.2%), Singapore (5.0%), and Taiwan (3.8%) completing the top five. This presents a once-in-a-generation opportunity for Hong Kong to compete for both enterprises and talent in the global marketplace.
The Hong Kong Monetary Authority (HKMA) and the region’s banking sector have doubled down on SME support, implementing credit relief measures, including repayment deferrals, to address liquidity strains.
Tourism poised for a rebound
With US-China trade dwindling, Hong Kong’s role as a neutral hub strengthens. Ranked the WTO’s 10th-largest merchandise exporter in 2023, the city’s free trade zone policy and connections to 600 ports position it to revive the retail industry. Chinese consumers whose overseas luxury spending was projected to reach US$325 billion in 2024 (Bain & Co) could pivot to Hong Kong for US goods, bypassing mainland tariffs.
Hong Kong’s tourism sector stands to benefit from the trade war. While neighbouring destinations such as Singapore impose a 9% goods and services tax and Japan a 10% consumption tax, the city offers goods at 0% duty. It is also the only jurisdiction where Chinese tourists can buy US products without Beijing’s retaliatory tariffs. Mainland visits to Hong Kong rose 27% year-on-year in 2024, reaching 34 million. Meanwhile, US tourists may also find better deals when shopping in Hong Kong.
When one door closes, another opens.
In times of crisis, new opportunities emerge — and Hong Kong stands uniquely positioned to seize them. The city’s resilient economy, strategic location, and business-friendly environment provide strong foundations.
However, realising this potential will require swift government action to transform challenges into advantages. Recent events, including the viral visit of internet personality IShowSpeed, demonstrate Hong Kong’s enduring global appeal and its capacity to capture international attention when opportunities arise.