Hong Kong shippers and trading groups have urged exporters not to dump shipments mid-voyage to avoid crushing tariffs by the White House, saying the “irrational” move would incur huge costs while tarnishing the reputation of the company involved and the country.
They made the calls on Thursday as the Post reported a case of a Chinese exporter abandoning goods on the water on the way to the US and surrendering containers to shipping companies.
Willy Lin Sun-mo, chairman of the Hong Kong Shippers’ Council, said he had not heard of similar cases involving local exporters, but he cautioned that such acts had severe consequences.
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“This is highly irrational and irresponsible as dumping the goods at sea will mean the exporter will lose everything, including effort and money. Apart from losing the cargo, it will fail to claim insurance for failing to fulfil contractual obligations and risk being sued by the importer or potential customers for damages,” he said.
“The move will not only severely hurt its reputation and deter overseas buyers leading to diminishing orders, but also tarnish China’s trade reputation, which will be a lose-lose to everyone.”
US President Donald Trump clarified on Thursday that Chinese imports would be tariffed at 145 per cent, while implementing a 90-day pause that set levies at a “baseline” 10 per cent for most countries.
Lin said that if the exporters transported the goods under the shipping arrangement of Free On Board (FOB), which sets the price of goods that includes delivery at the seller’s expense to a specified point and no further, it would be the responsibility of the US buyers to pay the tariffs.
“If the buyers refuse to do so, then the Chinese exporters have to swallow the tariffs first to fulfil the contract and then claim insurance to recoup the losses,” he said.
For Landed Duty Paid, under which the price is the final amount paid by a buyer for the goods manufactured, Lin said there was no reason for exporters to ditch the goods at sea as they would risk being sued by the buyer and potential customers at a compensation as high as three times.
Dennis Ng Kwok-on, vice-president of the Chinese Manufacturers’ Association of Hong Kong and also an exporter of gifts and souvenirs, echoed Lin, saying it was unreasonable for exporters to dump goods during transit to avoid the tariffs.
“This is a typical situation of inflicting harm to others without benefiting itself,” he said. “Besides, there is a risk of being sued for damages and seriously hurting [a company’s reputation]. Exporters shouldn’t take this step as upholding their reputation is very important.”
Ng said US buyers halted shipments to the country on Wednesday night, adding they could not hold the goods for long as they did not have enough space and also needed to solve their cash-flow problems.
“For my company, we will see if our goods can be sold to European countries to ease the impact of the tariffs,” he said. “But for those manufacturing a particular US brand of goods, they cannot shift the products to other countries as they are protected by intellectual property rights.”
Eric Sun Yung-tson, chairman of the Hong Kong Exporters’ Association, said he had not heard of any local exporters dumping cargo mid-voyage to the US, adding only a small amount of goods were directly sent from Hong Kong.
“If Hong Kong businesses are exporting goods to the United States via mainland China, they should observe the situation carefully at this stage before making a decision, because the current circumstances are changing every day,” Sun said, adding electronic products were the most affected, with household goods also beginning to see an impact.
“The association hopes that import and export businesses will become more diversified and not focus solely on the United States market. They should develop different regions themselves. If the government can provide more preferential treatment or relaxed policies, SMEs would greatly welcome it.”
Hong Kong authorities on Thursday introduced three measures to insure local small and medium-sized enterprises against pre-shipment risks amid the escalating trade war, including providing a 50 per cent premium discount and extending the free protection period.
The pre-shipment risk insurance protects businesses from financial losses if an order is cancelled before shipment due to reasons on the buyers’ side, such as insolvency, repudiation of contract before shipment or country risks.
The three measures, launched by the Hong Kong Export Credit Insurance Corporation, include extending the free pre-shipment risk protection for policyholders of the “Small Business Policy” to June 30, 2026.
The “Small Business Policy” is tailor-made for Hong Kong exporters with an annual turnover of less than HK$50 million (US$6.44 million), covering sale and service contracts they have with their overseas buyers or clients.
Additional reporting by Oscar Liu
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