As part of President Trump’s order to end any preferential treatment for Hong Kong, the rules of origin for goods made in the region are changing.
In a Federal Register notice published Tuesday morning, U.S. Customs and Border Protection said instead of “Hong Kong” origin markings, all goods produced in the region must now be marked “Made in China.”
There’s no indication yet as to whether these goods will now be subject to some of the same Section 301 tariffs that have impacted other Made in China goods.
“Given the commercial realities, affected parties may need a transition period to implement marking consistent with the position announced in this notice,” the Federal Register noted. “Therefore, this document notifies the public that, unless excepted from marking, goods produced in Hong Kong, which are entered or withdrawn from warehouse for consumption into the United States after September 25, 2020, must be marked to indicate that their origin is ‘China.’”
The change comes as a result of Trump’s July 14 executive order on Hong Kong’s normalization. As part of the order, the president said Hong Kong “is no longer sufficiently autonomous to justify differential treatment in relation to the People’s Republic of China.”
Trump has been battling China on several fronts over what he deems its unfair practices, and this was the latest strike in that fight.
The president’s play follows China’s new national security law passed at the end of June, which many say effectively buries the “One country, two systems” principle of governing Hong Kong. That principle was what afforded the former British colony much of its autonomy. Now, the mainland has more authority to impose order in Hong Kong as it sees fit. As such, President Trump’s crackdown on Hong Kong is really a crackdown on China.
Because many wealthy Chinese nationals and influential players tap into Hong Kong’s preferential treatments with the U.S. to ease business and benefit from things like duty breaks or less regulated banking, pulling the plug on those privileges deals China another blow, further hampering any trade benefits or access.
Addressing the lack of clarity over the now new potential for tariffs on Hong Kong-originating goods, as well as anti-dumping or countervailing duties assessed on goods made in China, Harold M. Grunfeld, partner at GDLSK trade law firm, said, “We are hopeful that the administration will clarify these issues in the very near future so as to avoid additional commercial disruption.”