23 Sep 2020
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Trump ends Hong Kong’s preferential status in a bid to punish China; jewellery trade likely to feel the impact
Donald Trump signed an order to end preferential economic treatment for Hong Kong, as a result of which, all HK goods exported to the U.S. are subject to a duty of 7.5% and must have a Made in China tag
By: Diamond World News Service
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Jul 22 2020 12:07PM
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Reference: 25049  

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Since China imposed a national security law in Hong Kong, the U.S. is showing it disapproval by ending its preferential economic treatment for Hong Kong. In a statement made earlier, Trump said that Hong Kong would receive no special privileges, no special economic treatment and no export of sensitive technologies.

Companies based in Hong Kong will have to examine the situation and understand what the implications will be for them. Hong Kong is known to be an export hub – many countries including China, export goods to the U.S. via Hong Kong – this way, China has managed to circumvent all the tariffs the U.S. has imposed on China.

One of the main reasons why Hong Kong is a preferred economic destination for many business owners is its low tax rates, currency rate as well as its conducive geographic location. However, subject to this new trade law imposed by Trump, things may take a U turn in Hong Kong.

Hong Kong received its special economic status in 1992, ever since which, the country has become a prolific business centre. Now, with this move, Hong Kong will lose its status as a separate customs territory. 

This order would also mean that gems and jewellery exports from Hong Kong to the U.S. which was previously subject to duties of about 3.3% will now be slapped a duty of 7.5%. Many Indian diamond and colour gemstone companies have offices in Hong Kong, where goods are shipped to the U.S. via Hong Kong – this move will likely impact these companies as well.

While the gems and jewellery sector in Hong Kong is already struggling to cope with the challenges the novel coronavirus has thrown at them, losing its economic preferential treatment is the big blow. To what extent this will impact the gems and jewellery trade in Hong Kong? Only time will tell.              

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