Hong Kong is still on course for export growth of 3% this year, the Hong Kong Trade Development Council (HKTDC) said, and cited the city's limited exposure to the U.S. market as a buffer against tariff-related pressures.

Strong frontloading amid tariff uncertainties

HKTDC noted that the city's 2025 export performance is navigating a period of "almost unprecedented turbulence" in the global trade arena — with much of the uncertainty stemming from the radical shift in US trade policy, particularly the heavy reliance on substantial import tariffs adopted by President Donald Trump's administration.

"In anticipation of a hefty tariff regime, many of Hong Kong's exporters opted to frontload their orders in the early months of 2025 before the new tariffs were implemented," the report said, adding that this helped bolster Hong Kong's export figures in the early months of the year and resulted in a number of other positive factors.

The report also cited Hong Kong's low exposure to the US market. HKTDC noted that the city's exposure to Washington is smaller when compared with other economies.

For instance, US-bound exports in 2024 accounted for just 6.5% of Hong Kong's total exports.

"By learning the lessons of previous tariff regimes, notably during the first term of President Trump (2017 to 2021), Hong Kong successfully reconfigured its trading base to reduce its exposure to uncertainties in the US market," the report said.

It added that since 2017, Hong Kong has bolstered its trade ties with other economies, with exports to the ASEAN bloc up 38.5% and to the Middle East increasing by 58.1%.

The upshot of this is that, despite a 10.5% drop in Hong Kong's exports to the US over the last eight years, Hong Kong's total exports for the period recorded a 17.2% increase.

"This vulnerability has been further reduced by many Hong Kong exporters prioritizing the diversification of their sourcing locations in line with China+1 or China+N strategies," the report said, adding that as a consequence, many of Hong Kong's US-bound exports are now sourced from different locations than they were in 2017.

In fact, in 2024, nearly half of Hong Kong's US-bound exports originated from a variety of international sources, notably up from the comparable figure of 15% eight years ago.

"Taken together, should a high level of US tariffs be reinstated, only about 3.4% of Hong Kong's total exports would be affected," HKTDC said.

"Any impact would then be further diminished once the products eligible for tariff exemptions were also taken into account," it added.

Collectively, these factors underpin HKTDC Research’s expectation that, even in such adverse trading conditions, Hong Kong's exports will still expand by 3% as predicted earlier in the year.

"Whatever the outcome of the ongoing trade negotiations, our low exposure to the US market, robust trade ties with other markets and diversified sourcing networks are the key underlying factors that should allow Hong Kong exporters to weather the US tariffs relatively unscathed," said Irina Fan, director of research, HKTDC.

Weaker export performance expected in H2

Meanwhile, in line with the overall expectation that export performance would weaken as 2025 progresses, the overall reading for the HKTDC Export Confidence Index in the second quarter fell below 50 for the first time in a year.

The report noted that this moderate decline in Hong Kong exporter confidence can be taken as aligning with the escalation in global trade uncertainty.

With the survey conducted at the height of the China-US tariff trade war (April 28-May 15), this downbeat outcome was widely anticipated.

In specific terms, this saw the Current Performance Index fall to 49.6 (down from 52.1), while the Expectation Index stood at 49.0 (down from 51.0). Subsequent to the completion of the survey, new trade negotiations have emerged between Mainland China (including Hong Kong) and the US; an outcome expected to be reflected in the findings of the 3Q25 Index.

In other findings, Hong Kong exporter confidence remained high regarding prospects in both the ASEAN bloc (59.9) and Mainland China (52.6), while the corresponding reading for the US plummeted to 31.6 (down from 46.7).

HKTDC noted that the Current Performance of three of the six key Hong Kong industry sectors tracked by the Index remained positive, with Jewellery at 51.6, Timepieces at 52.1 and Equipment/Materials at 50.4.

In the case of the other three sectors, Electronics and Clothing (both 48.9) were marginally below the watershed level, while Toys (43.1) continued its recent decline.

"Overall, the findings for the second quarter align with earlier expectations of weaker exporter confidence amid US tariff uncertainties," said Kenneth Lee, special project and business advisory section Head, HKTDC Research, putting the findings of the report into context.

"It is, however, heartening to see Hong Kong exporters maintain a largely positive outlook with regard to all of the city's major markets, except for the US," he added.