Trump’s options to hit Hong Kong, from tariffs
IF the markets are any judge, U.S. President Donald Trump’s vow of “meaningful” action to strip some of Hong Kong’s trade privileges has so far proved underwhelming.
Trump’s announcement in the White House’s Rose Garden last weekend didn’t provide any details or timeframe for what would come next, only that it would cover the full range of agreements between the U.S. and Hong Kong with “few exceptions.” U.S. stocks on Friday erased losses and traded little changed, with the S&P 500 Index rising 0.5% at the close in New York. Hong Kong’s Hang Seng Index yesterday saw gains of more than 3%, led by the finance sector.
The risk was more evident later in the day yesterday, after Bloomberg reported that a “phase one” trade deal between the countries may be at risk after Chinese government officials told major state-run agricultural companies to pause purchases of some American farm goods including soybeans as Beijing watches for any U.S. moves on Hong Kong. S&P 500 Index futures gave up gains to trade 0.6% lower, while U.S. 10year bonds erased declines.
Under the U.s.-hong Kong Policy Act of 1992, the president is empowered to suspend the territory’s special trading privileges at any time through an executive order. The law covers the whole facet of the relationship, from trade to recognizing passports to rules that affect air travel, shipping and investment. It even allows for U.S. dollars to be freely exchanged with Hong Kong dollars, which if revoked would amount