Business chambers expect subsiding tariffs to bolster global trade stability

Major business chambers in Hong Kong welcomed the substantial progress over the weekend in Sino-US trade talks, as the news boosted the local stock market benchmark by 3 percent on Monday.

In a statement responding to media inquiries, the American Chamber of Commerce in Hong Kong expressed its support for the announcement of a trade agreement reached between China and the US.

“Our members look forward to good and swift progress and hope that the mechanism for continued discussions on economic and trade relations, led by Chinese Vice-Premier He Lifeng, US Treasury Secretary Scott Bessent, and US Trade Representative Jamieson Greer, will be fruitful and in the interest of both countries,” the statement said.

READ MORE: China, US agree to de-escalate trade tensions

According to the announcement, the US suspended the implementation of a 24 percent “reciprocal tariff”, and China also correspondingly suspended the implementation of a 24 percent retaliatory tariff within the initial 90 days.

The two sides will also cancel tariffs imposed on each other’s imported goods in subsequent two administrative orders and tax committee announcements.

In addition, China will suspend or cancel its nontariff countermeasures against the United States as of April 2. All the measures are set for implementation before Wednesday.

The Federation of Hong Kong Industries welcomed the announcement, calling it a constructive first step toward enhancing communication and fostering meaningful dialogue between the two nations. It described the development as encouraging for its members.

“We are pleased to see progress in the trade dialogue and reiterate our strong support for open markets, which are fundamental to global economic growth and the success of Hong Kong’s business community,” FHKI Chairman Steve Chuang Tzu-hsiung told China Daily.

Chuang said that a stable and predictable global trading environment is critical, and this positive development provides an opportunity for businesses to further consolidate their presence in established markets while actively exploring new opportunities in emerging markets, including the Association of Southeast Asian Nations countries and other Belt and Road Initiative partners.

The Chinese Manufacturers’ Association of Hong Kong also welcomed the phased progress made by China and the US, saying this will help maintain the stability in global trade, investment, international cooperation and supply chains.

“The current tariff level remains high and is still a long way from the ‘sustainable’ tariff level that the industry is able to absorb. There is also uncertainty in US trade policy, so the industry should pay close attention to the development of the situation and flexibly adjust its strategy,” CMA said in a written statement.

The CMA added that it will actively support Hong Kong enterprises explore diversified markets and enhance the flexibility and resilience of industrial and supply chains to cope with possible changes in the international market.

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Buoyed by the joint statement, the benchmark Hang Seng Index rose 3 percent to close at 23,549, reaching a one-and-a-half-month high with a trading volume of HK$322.4 billion ($41.37 billion). The index had once jumped over 800 points before retreating to a 681-point gain.

Major beneficiaries in Monday’s stock rally included Alibaba Group (up 6.1 percent), Tencent Holdings (4.6 percent), Ping An Insurance (Group) Co of China (3.9 percent), Hong Kong Exchanges and Clearing (3.4 percent), Meituan (2.5 percent), and China Construction Bank (1.5 percent).

The Hang Seng China Enterprises Index, which tracks mainland-based companies, rose 3 percent to finish at 8,559 points, while the Hang Seng Tech Index, a gauge of the city’s technology stocks, jumped 5.2 percent to close at 5,447 points.

“The development of China-US tariff negotiations is expected to continue influencing market sentiment in the short term. The Hang Seng Index is expected to be supported near the April low of 19,300 points,” according to a stock market research report from Dah Sing Bank.

The report added that the Hong Kong stock market may remain supported in the medium term as the central government is expected to launch new policies to boost domestic consumption, and further develop artificial intelligence.

oswadl@chinadailyhk.com