Trump tariffs will prolong high interest rates, Hong Kong’s Paul Chan warns

US President Donald Trump earlier signed an executive order imposing 10 per cent tariffs on Chinese imports

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Hong Kong’s finance chief has also discussed plans to reduce the city’s deficit. Photo: Elson Li

Published: 2:19pm, 2 Feb 2025Updated: 5:50pm, 2 Feb 2025

America’s new tariffs on Chinese imports could trigger domestic inflation in the United States, potentially prolonging Hong Kong’s high interest rate environment and putting pressure on locally based businesses, the city’s finance chief warned on Sunday.

Financial Secretary Paul Chan Mo-po also said city authorities were considering adjusting a HK$2 (26 US cents) concessionary fare scheme for elderly and disabled residents, describing it as “financially unfeasible in the long run” amid efforts to tackle a budget deficit.

Hours earlier, US President Donald Trump signed three executive orders imposing 10 per cent tariffs on Chinese imports and 25 per cent levies on goods from Canada and Mexico.

The measures take effect on Tuesday.

Chan said he expected the resulting added costs of the tariffs would be passed on to American consumers, triggering higher inflation in the US, at a time when Trump’s administration was seeking to aggressively boost investment and infrastructure in the country.

“High inflation [in the US] will affect us, as interest rates will also be high. As the Hong Kong dollar is pegged to the US dollar, our relatively high interest rate environment will persist for a period of time,” Chan told a radio show.