Industry leaders urge diversification amid uncertain economic climate

Hong Kong industry representatives said on Wednesday that the United States’ latest trade restrictions are harmful both to the US and the special administrative region, prompting the city’s business sector to reduce reliance on the US by turning to alternative markets.

On Tuesday, the US imposed additional 10 percent tariffs on all Chinese products, including those manufactured in Hong Kong, and those imported and reexported from the international trade center.

In a statement on Wednesday evening, the Hong Kong SAR government expressed strong disapproval of the US’ imposition of an additional 10 percent duty on Hong Kong products.

READ MORE: HKSAR govt slams additional US duty on HK products, parcel halt

“We strongly oppose any attempts to undermine Hong Kong’s reputation and erode our status as a separate customs territory,” a spokesperson said.

The city will take all possible actions to defend its legitimate interests if the US does not reverse its wrongdoing, including considering taking up the matter in the World Trade Organization, the spokesperson added.

Moreover, following the US’ ending of its tax-free customs policy on small-value parcels entering the US, the US Postal Service temporarily suspended accepting parcels — except for letters — from the Chinese mainland and Hong Kong, but resumed the delivery services hours later.

Despite the reversal, industrialists expressed concerns over the uncertainty.

Jeffrey Lam Kin-fung, a Hong Kong lawmaker representing the business sector, said the tariffs hike under a US-initiated trade war was anticipated, and should not have a major effect on exports in the short term.

He said that the Hong Kong business sector is prepared for the challenge, with many manufacturers diversifying their investments beyond the US.

Lam expressed hope that Chinese and US authorities will “sit down together and talk it over” as escalating tariffs benefit no one globally, leading only to inflation and public dissatisfaction.

Willy Lin Sun-mo, chairman of the Hong Kong Shippers’ Council, said his council expects stricter restrictions on Chinese goods under US President Donald Trump’s new administration, foreseeing challenges especially for small and medium-sized enterprises.

He said halting parcel deliveries, if implemented, would severely affect the e-commerce industry. In recent years, many mainland e-commerce products have been routed through Hong Kong to reach global markets. Such a move could have led to goods being stuck in Hong Kong, causing delayed deliveries and refunds claims from US consumers.

E-commerce practitioners may opt to use large international courier companies for shipping, albeit at significantly higher costs in both money and time, Lin said.

Some Hong Kong enterprises have decided to bet less on the US market to avoid potential complications, redirecting their attention to markets in areas like Southeast Asia, Australia, and New Zealand, Lin added.

The Chinese Manufacturers’ Association of Hong Kong said that while around half of its 3,000 members are still engaged in US business, manufacturers recognize the need to reduce their dependence on the US market. Some are exploring ways to expand their presence in the mainland market to mitigate the effects of increased tariffs.

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Lonnie Zhang, a cross-border e-commerce entrepreneur who started her business on the mainland in 2024 after graduating from a Hong Kong university, acknowledged the upcoming challenges, with the US market accounting for 50 percent of her exports.

Zhang said that the US Postal Service has been her go-to shipping option because of its affordability, and the threatened parcel halt would have forced her to explore alternatives.

“The biggest issue now is the increased tariffs,” Zhang said. Previously, her company could offer free shipping for goods priced above $10, but now the threshold might be raised to $30, and product prices will have to rise.

“When policies change, we just have to adapt. There are always more solutions than problems,” she said.

Contact the writer at amberwu@chinadailyhk.com