Hong Kong’s freight forwarding industry is suffering collateral damage from an intensifying tariff war between China and the United States, shaking the city’s crucial role in re-exporting goods, business leaders have warned.
Many manufacturers with more than 15 per cent of business exposure to China-US trade had been forced to slash jobs or save costs, said Joyce Tai, executive vice-president for worldwide partnerships at Nasdaq-listed global freight booking platform Freightos.
“There will be [a] huge economic hit, and probably more so on the Hong Kong side, because ... Hong Kong is a pass-through,” she said.
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That is driven by tariffs of 145 per cent that US President Donald Trump recently imposed on Chinese imports. He also levied so-called reciprocal tariffs on most of the US’ trade partners, but to a lesser extent.
“And the impact of the same tariff imposed [on] Hong Kong is just probably a lot heavier than that we are seeing on mainland China,” Tai said.
According to TAC Index, an air freight intelligence provider, the index of outbound routes from Hong Kong fell by 3.1 per cent week on week in the four weeks leading to April 28, leaving it 3.6 per cent lower year on year.
“Market players have been trying to navigate volatility and turmoil in global trade caused by the on-again, off-again saga of new tariffs into the US, as well as an end to the ‘de minimis’ exemption for small packages of under US$800,” TAC Index editor Neil Wilson said, who expected further falls in air cargo rates.
Before the tariff war, the city’s value of exports to the US gained 4 per cent year on year, reaching HK$70.25 billion (US$9.06 billion) in the first quarter, according to the Census and Statistics Department. But the value of imports sank by 6.2 per cent, falling to HK$51.7 billion.
Analysts said they expected tariffs would dampen exports and re-exports to the US from early April.
The trade war would also have implications for Hong Kong’s mandate to be an international maritime and transshipment hub, serving as a bridge between the country and the rest of the world.
Freightos’ head of research, Judah Levine, highlighted “reports of quite a significant pause or cancellations of orders” and ocean freight bookings, “specifically out of China”.
“We know that carriers are cancelling many sailings, very high levels of sailings that were scheduled from China to North America for the coming weeks,” Levine said, expecting lower ocean freight volumes if the tariff situation remained significant.
“That shows a drop in demand for ocean freight out of China to North America, to the United States.”
For some businesses, tariffs are “not unviable, and certainly if shippers [and] importers are ordering anyway, you would see those costs passed on to consumers,” he added. “And I do not think we are seeing that just yet. The tariffs only went into effect a couple of weeks ago, so there will still be time for those costs ... to show up.”
In late April, German container carrier Hapag-Lloyd said its customers had cancelled 30 per cent of shipments to the US from China as a result of the trade conflict.
Forty-one per cent of container capacity scheduled from Hong Kong to North America’s west coast in the week starting Monday has been cancelled, and 32 per cent in the coming two weeks, according to supply chain research firm Sea-Intelligence. While high, this is not outside of the normal supply volatility seen on the liner services from Hong Kong to North America.
“For the services from Hong Kong to North America, we do not see any discernible increase in the number of blank sailings for April or May, which is contrary to what we see for the overall transpacific trade,” said Alan Murphy, chief executive and founder of Sea-Intelligence.
“One could speculate that as Hong Kong has lost significant presence on the transpacific over the past decade, there is less optionality to cut capacity on the services from Hong Kong.
“In 2013, Hong Kong had 30 weekly services connecting to North America, but by 2024 this had dropped to just 10 weekly services, and in the 2025 networks this has dropped even further to just seven weekly services.”
The situation is further aggravated by a growing number of manufacturers setting up operations or trading in Mexico to take advantage of the zero-tariff benefits under the US-Mexico-Canada trade agreement and tax incentives.
“A lot of manufacturers that we know of ... are already taking measures to either cut down their labour forces, or they are looking at different ways to save money,” Tai said.
Levine, meanwhile, said that “since the previous Trump trade war, we’ve seen a gradual shift away from China and towards ... alternatives. Mexico was a big beneficiary of that”.
He added that investments from China into Mexico and logistics flows between the two countries were on the rise.
Mexico-based industry leader Stefanie Pan Xueyun said: “During [and since] the pandemic ... we’ve been receiving Chinese companies every month, a lot of them coming to Mexico.”
Reasons include the cost, logistics, uncertainty of labour availability and tariffs, according to Pan, manager of Asia business development at American Industries Group, which has developed 17 industrial estates and served more than 300 companies in Mexico.
For instance, Hong Kong-listed battery producer Leoch International Technology is building its second factory in Mexico.
“Since the pandemic, we have noticed changes in the concept of a global supply chain referred to as the global village, which is gradually shifting towards regionalisation,” said Leoch’s executive director and chief investment officer, Helen Hong Yu.
Steve Chuang Tzu-hsiung, chairman of the Federation of Hong Kong Industries, expressed concerns about the unpredictability of US trade policy.
“How am I to know what Trump will say tomorrow? [If he] says that Mexico gets 145 per cent tomorrow, what then? Wouldn’t my investment be in vain?” Chuang said.
“Therefore, such unpredictable policies in the US, changing with each passing day, make it fundamentally impossible to conduct business.”
More from South China Morning Post:
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- Hong Kong caught in middle of Trump tariffs, AmCham says
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