Small- and medium-sized enterprises (SMEs) in Hong Kong are facing difficulties due to US tariffs on steel and aluminium imports.

This information comes from Danny Lau, honorary chairman of the region’s SME association.

Lau’s metal fabrication business derives one-third of its revenue from the US.

A temporary truce between the US and China, initiated on May 14, 2025, has slightly reduced tariffs.

Chinese exports to the US now face a 30% additional tax, down from 145%.

However, some additional tariffs on other products remain in place.

The uncertainty surrounding the trade truce, which is set to last 90 days, has left SMEs like Lau’s approaching the situation cautiously.

Many are concerned about the potential return of high tariffs if negotiations fail.

🔗 Source: CNA

🧠 Food for thought

1️⃣ Hong Kong’s unique vulnerability as a trade intermediary

Hong Kong has historically served as a crucial conduit for China-US trade, with HK$277.5 billion worth of goods exported from Mainland China to the US via Hong Kong in 2017, representing 4.3% of Hong Kong’s total trade and 9.1% of its total exports 1.

This intermediary position makes Hong Kong SMEs particularly susceptible to trade tensions, as they often lack the scale advantages of larger corporations to absorb or mitigate tariff impacts.

The city’s commerce officials have been warning businesses since 2018 to “prepare for the worst” from prolonged US-China trade disputes, recognizing the disproportionate impact on smaller enterprises 2.

Even with Hong Kong’s special status as a separate customs territory, its SMEs remain caught in the crossfire, facing not just direct tariffs but also reduced orders from both American buyers concerned about supply chain disruptions and Chinese manufacturers facing export challenges.

The metal fabrication industry exemplifies this vulnerability, with businesses like Lau’s facing compound tariffs that can reach nearly 80% when all levies are combined 3.