Negotiations over US President Trump’s tariffs are now closed and will take effect on August 7. His plan was to raise tariffs so that manufacturing and businesses would return to the US. But they haven’t.
In fact, as far as Hong Kong is concerned, it is coming out as the winner in this so-called trade war.
Without any rhyme or reason, Trump has introduced new tariffs across the board, ranging from 10 per cent for UK, Australia and Chile to 50 per cent for Brazil, 39 per cent for Switzerland and 34 per cent for China (including Hong Kong).
Trump has totally ignored Hong Kong’s independent membership to the World Trade Organisation and lumped the city with China proper, which had a US$992 billion surplus with the US while Hong Kong is being penalised for having a US$22 billion deficit.
As more evidence is surfacing of a negative reaction in the US to Trump’s tariffs, Hong Kong is showing the opposite.
The Institute for Supply Management in the US said manufacturing employment index dropped to 43.4, its lowest level since July 2020. This marks a significant slowdown in hiring as companies face rising raw material costs, partly driven by tariffs imposed by Trump.
The US Commerce Department data released on last week showed prices for home furnishings and durable household equipment jumped 1.3 per cent in June, the biggest gain since March 2022.
But in Hong Kong direct imports of fruit from the US to Hong Kong soared 118 per cent in value in April as suppliers diverted their stock from the mainland where they faced higher taxes. A 5 kg carton of US cherries that fetched a wholesale price of HK$400 last July is now being sold for between $260 and $280, a drop of up to 35 per cent.
The release last week of the “Hong Kong Business Environment Report: One Country, Two Systems Unique Advantages” has undoubtedly brought a strong shot to Hong Kong society, domestic and foreign investors.
The report provides all sectors of the community and Mainland and overseas investors with details on Hong Kong's latest developments and strengths, comprehensively showcasing Hong Kong's open, safe, stable, efficient and internationalized business environment.
The report highlights that the Government has achieved remarkable results in attracting enterprises, investment and talent. Last year, the number of companies in Hong Kong with parent companies located outside the territory significantly increased by about 10 per cent, reaching nearly 10,000, while the number of start-ups reached nearly 4,700, both reaching record highs. The Office for Attracting Strategic Enterprises in Hong Kong has attracted 84 strategic enterprises to set up or expand their business in Hong Kong, including enterprises with a market capitalization or valuation exceeding $10 billion and engaged in cutting-edge technologies. From January 2023 to the first six months of 2025, Invest Hong Kong assisted more than 1 300 overseas and mainland companies to set up or expand their business in Hong Kong, bringing in investment of more than $160 billion.
In terms of talent, as of June 2025, about 500 000 applications under various talent admission schemes were received, nearly 330 000 of which were approved, and nearly 220 000 talents have arrived in Hong Kong.
Foreign businesses still maintain high confidence in Hong Kong. A report by the American Chamber of Commerce indicated that 75 per cent of enterprises it interviewed, identified with Hong Kong as Asia’s most competitive international business and 79 per cent indicated they had no intention of moving their headquarters out of Hong Kong.
As a spin-off of the business report, the government has produced a 100-page booklet for potential investors. It positions Hong Kong as a super connector between the Chinese mainland and the rest of the world and highlights Hong Kong’s robust legal and financial systems.
It explains everything anyone would want to know about moving to Hong Kong and the opportunities it offers. Investing in Hong Kong is akin to walking into a store and everything there is before you.
Mark Pinkstone
** The blog article is the sole responsibility of the author and does not represent the position of our company. **
Hong Kong is facing a dilemma as more locals are spending their dollars outside of the city than what the visitors are bringing in.
Relaxed visa/permit restrictions for locals and foreign residents alike is making it easier for travel to the mainland while inbound traffic crossing the boundary is low budget and spending less on accommodation and food.
Tourism is an important pillar for Hong Kong’s economy. In pre-COVID times, tourism accounted for about four per cent of the territory’s Gross Domestic Product (GDP) and provided for about six per cent of total employment.
In Hong Kong’s heydays, the city saw about 65 million tourists in 2018, of which 51 million came from the mainland. It was boom time for retailers and restaurants. Long queues of mainland shoppers would line the streets along Canton Road and elsewhere waiting to buy luxury items from Gucci, Prada, Tiffany’s and other high-end stores which set up shop in Hong Kong to tap this lucrative market.
Today many restaurants and retail outlets are closing down, especially in the boundary towns of Sheung Shui and Yuen Long. The market is no longer there, and high rental costs make it almost impossible to survive.
During the 2025/2026 festive season, Hong Kong saw a 25.6 per cent rise in inbound trips on New Year’s Day 2026 (664,338 trips), but this was still countered by a massive 515,954 outbound exits on the same day.
Winston Yeung, chair of the Hong Kong Federation of Restaurants & Related Trades, told local media that business was sluggish during the Christmas holiday, with some restaurant owners calling it “the slowest business at Christmas over the past 10 years.”
Unfortunately, the local market is not propping up the tourism outlets. Instead, the locals are traveling in large numbers to Shenzhen and Macau and other parts of China for day trips or extended holidays, thereby providing a leakage in the local economy.
While Hong Kong received more than an estimated 45 million visitors last year, more than about 100 million departures were recorded by the Immigration Department of locals leaving Hong Kong by plane, train or bus mainly to the mainland (75 per cent), and to other major Asian destinations.
Hong Kong has 320 hotels offering 92,907 rooms, according to the Hong Kong Tourism Board. Despite mainlanders’ choice of more budget accommodation, occupancy rates for the hotel industry remained high at 88 per cent last year. The major hotels are not affected by the change in mainlanders’ preferences as they rely more on the affluent international tourist, visiting Hong Kong for business, conventions or holidays.
Property developer, Caldwell Banker Richard Ellis (CBRE) says Hong Kong’s hospitality market currently presents various investment-ready assets including rare investment opportunities for upper upscale and luxury hotels. These high-end properties are particularly attractive due to their resilience, as they are less reliant on Chinese group travelers and enjoy sustained spending power among affluent individual travelers and international visitors. This makes them attractive for investors seeking stable returns in a dynamic market.
To encourage locals to spend more at home and at the same time provide a bonus for tourists, Hong Kong has organised a series of mega events, many held in the new sports stadium on the site of the old Kai Tak airport in Kowloon. Traditional events in 2026 will include the French May Arts festival in March, Hong Kong Book Fair in July, Hong Kong performing Arts Expo in October, the World Snooker Grand Prix in February, and, of course, the international dragon boat races in June.
Blockbusters will include BlackPink World tour in January, the Hong Kong marathon, which draws in runners and their supports from around the world, and the Hong Kong Tennis Open also in January.
That is good for the inbound and outbound tourists alike. But more needs to be done to tip the tourism scales to a surplus for Hong Kong’s economy to grow at a faster pace. As the saying goes charity starts at home, so it is up to us as local residents who have reaped the benefits of the city to spend more in local restaurants and retail outlets than spend it elsewhere. Support local enterprises. After all, the restaurants in Hong Kong are ranked among the best in the world and are tax free as against a value-added tax applied to restaurants and shops in the mainland.
