A formal complaint at the World Trade Organisation would be considered if the US carried out heavy tariffs on aluminium imports from mainland China and Hong Kong, the city’s trade minister revealed on Monday.
“Tariffs should be proportionate and reasonable, even when citing national security,” Secretary for Commerce and Economic Development Edward Yau Tang-wah said on a radio programme. “We reserve the right to lodge a formal complaint when necessary.”
Yau warned that Hong Kong would suffer losses if the mainland and the US were entangled in trade disputes.
US President Donald Trump last week said he would sign off this week on a plan to impose a 23.6 per cent tariff on aluminium products from Hong Kong and the mainland as well as Russia, Venezuela and Vietnam. Trump argued the US was losing “many billions of dollars on trade with virtually every country it does business with” and that his administration needed to protect American workers and industry.
The US Department of Commerce claimed that a US$55 million (HK$430.6 million) trade deficit from aluminium products existed between Washington and Hong Kong from business conducted during January to October last year. It said the imbalance had negatively affected the economic welfare of aluminium-related industries in the US and threatened national security.
Hong Kong exported about US$30 million (HK$234.9 million) in such products over the first 10 months of last year. The figure accounted for less than 0.2 per cent of the total imported to the US.
Yau said that although Hong Kong’s export value was not large, the proposed tariff could exact “a heavy toll” on the local aluminium industry because only a few manufacturers were involved.
The trade minister noted he met members of five industry groups as well as officials at the American Chamber of Commerce in Hong Kong last week to learn about their concerns.
US commerce officials also called for a 53 per cent tariff on steel products from China and 11 other countries, saying the import of foreign metals threatened the viability of US manufacturers.
Analysts considered the move the first salvo in an impending trade war between the US and China. It came as Xi’s top economic envoy, Liu He, arrived in the US for five days of trade talks on February 27.
As Liu wrapped up the trip on Saturday, the Chinese Communist Party mouthpiece People’s Daily reported the two sides had engaged in “candid and constructive” talks that were “helpful to mutual understanding and promoting cooperation”. No time frame for the next round of talks was given.
Tensions over Sino-US trade have escalated in recent months. In January, Beijing revealed its record trade surplus with Washington was US$275.8 billion last year – an 8.6 per cent rise from 2016, or about 65 per cent of China’s total global trade surplus.
“If big countries like China and the US get entangled in trade disputes, Hong Kong will suffer losses because we continue to practise a free economy,” Yau said.
But he believed the WTO’s ability to mediate international trade disputes and prevent barriers had been impeded in recent years.
“We appeal to all major powers to practise self-restraint.”
Hong Kong joined the WTO as a founding member on January 1, 1995, and has maintained separate membership since its handover in 1997 from British to Chinese rule.
The city is now involved in 14 WTO-registered disputes, with only one case as the complainant.
Hong Kong filed its complaint against Turkey on February 12, 1996, over the country’s restrictions on textile and clothing imports.