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While flashing another red signal concerning the US-China trade relations, the South China Morning Post (SCMP) quotes US government notice while saying, Goods made in Hong Kong for export to the United States will have to be labeled “Made in China” after September 25.

Key quotes

The move, in accordance with the suspension of the Hong Kong Policy Act of 1992 and the invoking of US President Donald Trump’s executive order on ‘Hong Kong Normalization’ will see Hong Kong companies subjected to the same trade war tariffs levied on mainland exporters, should they make products subject to these duties.

A notice will be published on the US Federal Register on August 11, stipulating that ‘45 days after the date of publication’ goods ‘must be marked to indicate that their origin is ‘China’. The move is ‘due to the determination that Hong Kong is no longer sufficiently autonomous to justify differential treatment in relation to China’.

The confirmation of a move implied by Trump’s previous legislation is another blow to Hong Kong’s struggling economy and to the high-value, if low-volume base of exporters in the city. Goods that fail to comply will face a punitive 10 percent duty at US ports.

FX implications

The news weighs on the market sentiment while trimming the recent gains of the S&P 500 Futures and Asia-Pacific stocks. However, these risk catalysts remain in the positive territory while cheering the increasing odds of the US stimulus.