WASHINGTON - US President Donald Trump’s executive order ending the special status of China's Hong Kong under US law effectively ends the special administrative region's (SAR) separate customs treatment from mainland - but the immediate impact on trade is likely to be limited, trade law experts say. 

Trump's order does not explicitly mention tariffs nor Hong Kong's separate customs status.  Instead, it suspends a 1992 law granting HKSAR special economic status, referencing a statute governing country-of-origin labeling for imported goods

Trump's order here issued late on Tuesday does not explicitly mention tariffs nor Hong Kong's separate customs status. 

Instead, it suspends a 1992 law granting HKSAR special economic status, referencing a statute governing country-of-origin labeling for imported goods. 

The net effect is to rescind HKSAR’s status as a separate customs territory, said Georgetown University law professor Jennifer Hillman, a former World Trade Organization appellate judge. 

That means goods from HKSAR will now be considered as being from China for duty purposes, Hillman and other Washington trade lawyers said. 

As Hong Kong shifted from being a manufacturing center to a trading and finance hub, its goods exports to the United States have fallen, to only US$4.7 billion in 2019. The largest category, according to US Census Bureau data here was US$2.2 billion worth of returned goods initially exported from the United States. 

The next largest categories were gem diamonds at US$388 million, jewelry at US$317 million and other gemstones at US$247 million. 

“It’s not going to be a devastating blow to Hong Kong’s economy,” said Claire Reade, senior counsel with Arnold and Porter in Washington. She added that much of Hong Kong’s exports had shifted to services. 

The change also could leave many US tariffs unchanged. Before the Trump administration’s trade war with China, goods from both HKSAR and the mainland had long been subject to duties at the US Most Favored Nation rate, which WTO data show averaged 3.3 percent last year

The change also could leave many US tariffs unchanged. Before the Trump administration’s trade war with China, goods from both HKSAR and the mainland had long been subject to duties at the US Most Favored Nation rate, which WTO data show averaged 3.3 percent last year.

A “Section 301” list subjected many Chinese consumer goods, including diamonds and jewelry, to a 15 percent US tariff in Sept 2019, reduced in Feb to 7.5 percent as a result of the Phase 1 trade deal with China. 

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The Trump order means that gems and jewelry from HKSAR - among the biggest imports from the territory - along with some other products, are now subject to the same duties. 

Several trade lawyers said they were still examining the implications of the order on Thursday, and noted that the US Trade Representative’s Office (USTR) has the ability to grant exclusions from the Section 301 tariffs on Chinese goods. A USTR spokesman did not respond to a request for comment. 

Trump's order does not immediately affect the United States' US$30 billion to US$40 billion in annual exports here to HKSAR, which are largely tariff-free, nor Hong Kong's independent membership in the WTO. However China's possible action could dampen sales of US goods there in the future, trade experts say. 

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HKSAR is consistently the source of the largest US bilateral trade surplus - US$26 billion in 2019 - with top US export categories including semiconductors, diamonds, jewelry, beef and aircraft engines and parts.