Trade

Trump to Detonate Another Trade Bomb in Hong Kong

JM Ashby
Written by JM Ashby

China has now passed their controversial national security law covering Hong Kong that will crack down on dissent but, in typical Trumpian fashion, the White House acted before China could making it all the more easy for them to justify passing the measure in the first place.

The law was passed this morning (evening local time), but the Commerce Department moved to revoke Hong Kong's "special" trade status that enables free trade and flow of goods through the territory last night.

The Commerce Department said it was suspending “preferential treatment to Hong Kong over China, including the availability of export license exceptions,” adding that further actions to eliminate Hong Kong’s status were being evaluated. [...]

[Secretary of State Mike Pompeo] said the United States, effective Monday, was ending exports of defense equipment to Hong Kong and will also take steps to end the export of dual-use technologies to the territory. Dual-use technologies have both commercial and military uses.

“The United States is forced to take this action to protect U.S. national security. We can no longer distinguish between the export of controlled items to Hong Kong or to mainland China,” Pompeo said.

The immediate consequences of this are that American companies who want to export goods to Hong Kong won't be able to just do that. They'll have to secure a license for each export in the same manner that the Trump regime is requiring for sales to Chinese-owned telecommunication company Huawei. Hong Kong is effectively on the black list now.

The secondary consequences that will come later is Hong Kong imposing their own retaliatory restrictions on American companies with operations inside the city.

Unlike previous trade wars waged by Trump, this will target services more than goods as technology and financial services companies primarily operate out of Hong Kong.

I'm not necessarily saying we shouldn't respond to China's policy, but nothing tells me the Trump regime has any greater strategy than a punitive one that will ultimately hurt the business operations of Americans more than any foreigners. There's no endgame, in other words. Reciprocal measures like this should lead to dialogue and deescalation, but the entire world is well aware that dialogue with Trump, to the extent that you can even engage with him at all, isn't worth spit.

That's especially true regarding China as we recently learned that Trump explicitly endorsed China's concentration camps and asked President Xi Jinping for help in the presidential election. Trump vocally supported protesters in Hong Kong before ordering a violent crackdown on protesters here in America.

The reason Hong Kong's trade status has been considered "special" is because we don't have a free trade agreement.

  • muselet

    China was always going to do away with its “one country, two systems” policy and fully integrate Hong Kong and Macau. The only question was when it would happen.

    Even a competent American administration couldn’t have prevented the national security law from passing, but it might have been able to finesse the situation, possibly even softening the proposed law around the edges enough to satisfy the dissenters in Hong Kong. Instead, the Trump administration’s cack-handed response guarantees the Chinese government will crack down hard on Hong Kong.

    This is not something that will be soon forgotten. Or forgiven.

    –alopecia