US President Donald Trump has raised planned tariffs on small parcels coming from China and Hong Kong to 90 per cent, tripling the rate he announced a week ago, amid an escalation of the trade war with Beijing.
Last week, Trump announced the US would end a duty-free exemption for shipments valued at US$800 or below from China and Hong Kong on May 2, subjecting them to a duty rate of either 30 per cent of their value or US$25 per item, rising to US$50 per item after June 1.
The US president signed an executive order on Tuesday that tripled the tariff rates, raising them to either 90 per cent of the shipment’s value or US$75 per item, effective May 2. Starting June 1, the latter rate will increase to US$150 per item.
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The move, which will close the “de minimis” exemption in the US, is expected to severely disrupt the operations of Chinese e-commerce retailers Shein and Temu, which have been popular for their low-budget products.
It will also further intensify the trade war between the world’s two biggest economies. Trump’s additional 50 per cent blanket tariffs on Chinese goods came into effect on Wednesday, bringing the US rate on China to a whopping 104 per cent, after Beijing refused to back down on its retaliatory 34 per cent levies, expected to begin on Thursday.
The US tariffs will also apply to goods coming from Hong Kong – a former British colony long considered an international trade hub and a separate customs territory from mainland China.
Trump’s tariffs on China and other trading partners have sent shockwaves through international stock markets and fuelled fears of a global recession.
Hong Kong’s Hang Seng Index plunged more than 3 per cent, to 19,494.92 points, when it opened on Wednesday. It rose 0.68 per cent to 20,264.49 points at the close of trading.
On Monday, the index saw its heftiest drop since 1997 during the Asian financial crisis, losing more than 13 per cent, or 3,021.51 points, in a single day.
Financial Secretary Paul Chan warned of increased market volatility in the short term but said so far no “drastic measures” from the government were needed.
Chief Executive John Lee on Tuesday called the US’s tariffs “reckless” and said they would bring “great risks and uncertainties to the world.”
He vowed to “fully seize” for Hong Kong the opportunities in China’s growth and also deepen the city’s ties with countries in the Middle East and Southeast Asia.
