U.S. considering suspension of Hong Kong's special tariff rates: sources

People wearing face masks take part in a protest against the second reading of a controversial national anthem law in Hong Kong, China May 27, 2020. REUTERS/Tyrone Siu

WASHINGTON (Reuters) - The Trump administration is considering suspending Hong Kong’s preferential tariff rates for exports to the United States as part of its response to China’s plan to impose national security laws on the former British colony, people familiar with the matter said on Wednesday.

Such a move, following U.S. Secretary of State Mike Pompeo’s declaration that Hong Kong was no longer autonomous enough from Beijing to merit special trade treatment, could put Hong Kong’s goods under the same tariffs that President Donald Trump has slapped on exports from the Chinese mainland, the sources said.

The option is among a range of ideas being weighed in response to China’s tightening grip on Hong Kong, which has raised fears for a loss of freedoms that have helped make it a global financial hub, the sources said, speaking on condition of anonymity.

A far more severe U.S. action would be formally revoking Hong Kong’s special status under U.S. law, a decision only Trump can make.

While Trump has imposed steep tariffs on many Chinese goods since taking office in 2017, Hong Kong has been treated separately from mainland China’s more managed economy, and its exports to the United States have been given lower rates.

But the United States only imported $4.7 billion worth of goods from Hong Kong in 2019, according to U.S. government figures, limiting the impact of imposing tariffs on Hong Kong products.

However, Hong Kong has a zero tariff rate on imports of U.S. goods, which would be at risk of Chinese retaliatory measures. Hong Kong was the source of the largest bilateral U.S. goods trade surplus last year, at $26.1 billion, based on U.S. Census Bureau data.

Reporting By Matt Spetalnick, additional reporting by David Lawder and David Brunnstrom; Editing by Franklin Paul and Steve Orlofsky