US to label Hong Kong goods as ‘Made in China’ in blow to city

The U.S. will order imports from Hong Kong to be labeled as ‘Made in China’ according to a government document, in the latest escalation of trade tensions between the two nations.

The notice, published in the U.S. Federal Register, says that goods produced in Hong Kong and imported into the U.S. must be marked to indicate their origin is China. This will begin after Sept. 25, the document said.

The actual impact of the new rules on Hong Kong’s trade or economy will likely be limited as there are few direct exports from the city to the U.S. The vast majority of the city’s shipments to the U.S. consist of re-exports, or goods passing through its territory with no substantial modifications.

Of Hong Kong’s roughly HK$304 billion ($39 billion) in exports to the U.S. last year, only about 1.2% were domestic exports, according to data from the Census and Statistics Department Hong Kong. Almost 80% was re-exports from China to the U.S.

The change was made because of President Donald Trump’s July executive order ending Hong Kong’s special status with the U.S. “due to the determination that Hong Kong is no longer sufficiently autonomous to justify differential treatment in relation to China,” the notice said.

Hong Kong’s government protested the announcement, which it said ignored Hong Kong’s “unique role” as a member of the World Trade Organization. The city’s government will discuss the decision with the U.S. via its office in Washington D.C., according to its statement, and didn’t rule out taking action against the U.S. decision.

The U.S. decision comes after China announced sanctions on 11 Americans in retaliation for similar measures imposed by the U.S. on Friday.