Hong Kong may face immediate pain from tariff increases promised by Donald Trump when he moves back into the White House, but businesses are largely prepared and the incoming US president’s transactional approach may open up room for some relief, experts have said.
One economist even predicted that Trump’s victory in the US presidential election might on balance “actually be good” for Hong Kong as Beijing would have to reprioritise the economy over politics in the face of geopolitical uncertainty.
Trump, who initiated a trade war with China in his first term as president and promised further tariff rises in his recent election campaign, is set to return to the White House in January, with multiple media outlets declaring him the winner of Wednesday’s poll.
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Chen Zhiwu, chair professor of finance at the University of Hong Kong, said the Hong Kong economy would inevitably be hurt as the US was likely to raise tariffs on Chinese goods and toughen policies on technology transfers and tech investments in China. But he said he also expected the new tariffs to be capped at 60 per cent.
The former Yale University professor pointed to one of Trump’s biggest supporters, tech billionaire Elon Musk, as a possible taming force in policymaking related to China during Trump’s second term.
He also anticipated more aggressive stimulus efforts from Beijing to counter the greater geopolitical uncertainty.
“Thus, on balance, this US election outcome may actually be good for Hong Kong, at least to the extent that it makes the leadership in Beijing reprioritise economic development over politics,” Chen said.
Eden Woon Yi-teng, president of the American Chamber of Commerce in Hong Kong, said he was “not so optimistic” about the city’s fortunes under a second Trump term, but expected things to be more manageable.
“Firstly, he had done it for four years before, coming up with some stunning policies at the time. I think he should have learned something and become more mature in policymaking,” he said.
“Secondly, [businesses in] China – including Hong Kong – have already anticipated that such a time would come. So a lot of adjustments have already been made.”
He said Hong Kong had managed to retain its status quo as a business hub for manufacturing even though production bases had been moving out of mainland China.
Towards the end of his first term, Trump signed a law to sanction individuals and banks deemed to have aided in the erosion of Hong Kong’s autonomy, as well as an executive order ending the city’s preferential trading status in retaliation for Beijing’s imposition of the national security law.
His administration also imposed sanctions on 11 mainland and Hong Kong officials in 2020, including then security minister and current city leader John Lee Ka-chiu.
Veteran political scientist Lau Siu-kai, a consultant at semi-official think tank the Chinese Association of Hong Kong and Macau Studies, said he expected Trump to double down on his hostile approach towards the city.
He said Trump might step up export controls on advanced tech goods, curbing the city’s innovation and technology development, or slap sanctions on individual officials.
“Trump is not someone who talks about values or ethics, but actual benefits,” Lau said. “He may want to bargain and make deals with China in exchange for something he wants.”
He said he did not expect the Trump administration to introduce punitive measures targeting the city’s trade as the country enjoyed a surplus with Hong Kong.
The US goods and services trade surplus with Hong Kong was US$21.6 billion in 2022.
“The Trump administration is also unlikely to jeopardise Hong Kong’s status as an international financial centre, which is actually helpful in consolidating the US dollar’s hegemony,” he said.
Current affairs commentator Derek Yuen Mi-chang said it was too early to tell whether Trump was keen to take a hawkish approach to Beijing, since his campaign had attracted supporters from the business and tech fields who were more China-friendly than the traditional hawks in the Republican Party.
“Many factions within the party are already vying for cabinet seats. This round of competition is actually very important. I would say it is too early to say anything about these things before minister candidates are named,” he added.
Yuen also called on leaders in Beijing and Hong Kong handling the city’s affairs to stay open-minded and review all options in case there was an opportunity to negotiate with the Trump administration, as he was better known for his transactional approach to international relations than for having an interest in shaping the world order.
Lawmaker Wendy Hong Wen singled out Musk as someone who could influence Trump to adopt a more moderate China policy, adding that the incoming president was less committed to ideological principles on liberty and human rights.
“At this time, Hong Kong, as a superconnector and super value-adder, really needs to grasp its positioning between China and the US,” she said.
“While aligning with the country’s position, we must be smart in our narrative so that Hong Kong can still serve as a bridge between China and the US.”
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