The US signed legislation that expresses US support for the Hong Kong protesters who have been clashing with police for months. This legislation will now complicate and sink the US trade deal that is now on the table – the Chinese leadership was getting close to singing a phase one deal. This trade bill now requires the US to look at trade status of Hong Kong and the possibility of sanctions against those who are violating human rights. A second measure bans the export of crowd-control items such as tear gas and rubber bullets to the city police of the ex-colony.
The China foreign ministry reiterated a threat of retaliation but there were no details given. After the US report, the government of Hong Kong expressed “extreme regret” which is similar to previous comments and statements made. However, when signing the bill, President Trump made it clear that he does want to have a relationship that does now veer off track, signaling that he values the US-China relationship. Of course, Asian stocks and futures fell after the bill was signed and Hong Kong stocks performed poorly but then started to get traction.