The new tariff imposed by the US on mainland Chinese and Hong Kong products could be the final straw for manufacturers who had hoped to weather the trade war, forcing an exodus of plants to Southeast Asia even as the city’s government downplays the impact.
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The extra 10 per cent levy, which pushes the total tariff and import duty burden to around 40 per cent when combined with existing duties, appeared to particularly impact electronic manufacturers among industries.
The new policy threatens to eliminate already thin profit margins for Hong Kong’s small and medium-sized enterprises (SMEs) that have struggled to diversify from their reliance on the crucial American market.
Industry veterans paint a stark picture of the challenges ahead.
“Businesses that did not move their plants elsewhere after the previous introduction of 25 per cent tariffs in 2018 can hardly survive the extra 10 per cent tariff,” said Pamela Mak Mei-yee, honorary president of the Hong Kong Small and Medium Enterprises Association.
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“Which companies can earn 30 per cent net profit? It’s impossible.”