US policy change in Hong Kong status has key trade implications

Overview

President Trump on July 14 issued an Executive Order (EO), signing into effect the Hong Kong Autonomy Act and stating, “pursuant to section 202 of the United States-Hong Kong Policy Act of 1992, that the Special Administrative Region of Hong Kong (Hong Kong) is no longer sufficiently autonomous to justify differential treatment in relation to the People's Republic of China (PRC or China) under the particular United States laws and provisions thereof set out in this order.” 

In light of that determination and in furtherance of the Hong Kong Autonomy Act, the EO provides that “[i]t shall be the policy of the United States to suspend or eliminate different and preferential treatment for Hong Kong to the extent permitted by law and in the national security, foreign policy, and economic interest of the United States.”

This action has important implications for trade between the United States and Hong Kong. This Insight will highlight these implications as well as other recent developments regarding trade between the United States and China.

The takeaway

The developments highlighted above could affect the supply chains of US entities in terms of both imports and exports. Potentially affected companies should analyze their supply chains and consider the possibility of alternate arrangements. Businesses also should expect further developments in this area, as both the United States and China continue to act and react to ongoing trade issues.