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The US reciprocal tariffs give a heavy blow to Hong Kong economy
2025-4-5
On Liberation Day, US President Donald Trump announced the imposition of reciprocal tariffs on countries all over the world, including an additional 34% tariffs in China. Together with the accumulated tariffs of 20%, the total tariff reaches 54%. Such kind of  tariffs will reduce the growth of GDP by 2%, and China's economic prospect will be clouded over from now on.
These reciprocal tariffs pose a huge challenge to Hong Kong's economy, which is fully integrated into the Greater Bay Area. In fact, when China's exports are blocked by heavy tariffs, Hong Kong, as a super connector that relies on providing import & export business services, will certainly be affected by the shrinking business. If China responds by devaluing the Renminbi (China official currency), domestic residents who come to Hong Kong for consumption and home buying will also reduce their expenditures. As a result, Hong Kong's retail industry and property sales will suffer from a shortage of buying power.
The economists predicted the US reciprocal tariffs will raise the inflation rate in the near future, and it will trigger the Federal Reserve to lift up the interest rates. Finally, Hong Kong will also be forced to follow suit. While the economy is weak and interest rate is hike, Hong Kong property market will be struck heavily.
Hong Kong retail industry and employment situation has been deteriorating. Many university graduates find it hard to get permanent jobs. To avoid unemployment, these graduates have to accept temporary jobs offers as substitutes. Therefore, the unemployment rate is still not high. However, the posts of temporary jobs will certainly be decreased under US reciprocal tariffs. As a result, the unemployment rate will be raised significantly. The scenario of above-mentioned rapid economic deterioration will occur later this year.
In the coming quarter, the negative impact of the tariffs war will begin to emerge. Therefore, home buyers must make sure that their jobs position will not be affected. They must also anticipate the payment pressure will be intensified as interest rates hike. If they are worried about market development, it is better to hold up for a while and defer their plan to buy a home.
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1. HK condemns US tariffs 2025-04-05 14:21:12 |
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The government has expressed its strong disapproval of the United States' decision to impose reciprocal tariffs on Hong Kong goods, effective 2 May. The U.S. will eliminate the duty-free de minimis treatment for products from Hong Kong and introduce tariffs on covered goods. In a statement, the government condemned the move, calling it "bullying" and "unreasonable." It further described the action as a violation of World Trade Organization (WTO) rules and a direct attack on the multilateral trading system, which is fundamental to international trade. |
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2. HK should conver more office to housing 2025-04-08 14:39:53 |
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Property companies in Hong Kong should consider converting more commercial buildings into student housing, apart from halting commercial land sales, to address the city’s office slump, property analysts said. “These measures will help office absorption, while offering more housing options in the market, stabilize rents, and effectively address the challenges associated with the shortage of student beds,” Rosanna Tang, executive director and head of research at Cushman & Wakefield Hong Kong, told Hong Kong Business. |
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3. HK PROPERTY INVESTMENT SLUMPED 2025-04-10 10:07:44 |
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Hong Kong's property investment market began 2025 on a somber note, with investors holding back amidst uncertainty over the timing of interest rate cuts, according to Colliers' latest Q1 2025 Quarterly Market Report. Total transaction value fell 36% quarter-on-quarter to $6.3b in the first quarter. Hotel assets accounted for the largest share of activity, making up 45% of total transaction value at over $2.8b. Office and retail transactions declined from the previous quarter’s high base.
Capital loss and mortgagee sales continued to be key drivers of investment activity. |
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