US to label Hong Kong's goods as 'made in China', in blow to city

The actual impact of the new rules on Hong Kong's trade or economy will likely be limited.
The actual impact of the new rules on Hong Kong's trade or economy will likely be limited.PHOTO: AFP

WASHINGTON (BLOOMBERG) - The United States will order imports from Hong Kong to be labelled as "Made in China" according to a draft government document, in the latest escalation of trade tensions between the two nations.

The notice is set to be published in the US Federal Register on Tuesday (Aug 11) and says that goods produced in Hong Kong and imported into the US must be marked to indicate their origin is China.

This will begin 45 days after the date of publication in the register.

The actual impact of the new rules on Hong Kong's trade or economy will likely be limited, as there are few direct exports from the city to the US.

The vast majority of the city's shipments to the US consist of re-exports, or goods passing through its territory with no substantial modifications.

Of Hong Kong's roughly HK$304 billion ($53.8 billion) in exports to the US last year, only about 1.2 per cent were domestic exports, according to data from the Census and Statistics Department Hong Kong.

Almost 80 per cent was re-exports from China to the US.

The change was made because of President Donald Trump's July executive order ending Hong Kong's special status with the US "due to the determination that Hong Kong is no longer sufficiently autonomous to justify differential treatment in relation to China", the notice said.

The US decision comes after China announced sanctions on 11 Americans in retaliation for similar measures imposed by the US last Friday.