US to label Hong Kong’s goods as ‘Made in China’ in blow to city

The U.S. will order imports from Hong Kong to be labeled as ‘Made in China’ according to a draft government document, in the latest escalation of trade tensions between the two nations.

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The notice is set to be published in the U.S. Federal Register on Aug. 11 and says that goods produced in Hong Kong and imported into the U.S. must be marked to indicate their origin is China. This will begin 45 days after the date of publication in the register.

The actual impact of the new rules on Hong Kong’s trade or economy will likely be limited as there are few direct exports from the city to the U.S. The vast majority of the city’s shipments to the U.S. consist of re-exports, or goods passing through its territory with no substantial modifications.

Of Hong Kong’s roughly HK$304 billion ($39 billion) in exports to the U.S. last year, only about 1.2% were domestic exports, according to data from the Census and Statistics Department Hong Kong. Almost 80% was re-exports from China to the U.S.

The change was made because of President Donald Trump’s July executive order ending Hong Kong’s special status with the U.S. “due to the determination that Hong Kong is no longer sufficiently autonomous to justify differential treatment in relation to China,” the notice said.

The U.S. decision comes after China announced sanctions on 11 Americans in retaliation for similar measures imposed by the U.S. on Friday.