A bill that forces the United States to support activist Democratic activists in Hong Kong may arrive at President Trump's desk as soon as Thursday morning, potentially complicating the administration's talks with China to end the trade war.
The bill passed by the Senate on Tuesday would require the government to impose sanctions on Chinese officials responsible for human rights violations in the territory. On Wednesday, the House passed the Senate version 417-1 and sent it to the White House.
If the law is signed by Trump, the bill will also require the Department of Foreign Affairs to annually review the special autonomous status it gives Hong Kong in trade. This status is separate from the relationship with China, and withdrawal of the status would mean less favorable trade terms between the US and Hong Kong.
Since the bill, in theory, is backed by a veto-secure majority in Congress, it can be adopted even if Trump vetoes it. And its assumption would likely strain relations with China at a sensitive moment in the trade negotiations.
Eswar Prasad, former head of the International Monetary Fund's China Division, said that Hong Kong's injection into the trade process could lead to the conversation with China, which is notoriously sensitive to political involvement outside.
further drive the story in Chinese domestic political circles that the United States is trying to violate China's sovereignty in its internal economic and political affairs, "Prasad said.
Although Trump announced last month that the United States and China had reached a "historic" so-called phase one trade agreement, the signing of an agreement has proved difficult. The two sides continue to negotiate and could reach an agreement in the coming weeks. But Trump has given mixed signals if he wants an agreement.
"I haven't wanted to do that yet because I don't think they have gone up," Trump said on Wednesday afternoon while touring an Apple manufacturing facility in Texas.
The United States and China have been fighting over the fate of the tariffs imposed by Trump on $ 360 billion in Chinese imports and additional duties to be imposed on December 15. China wants all tariffs rolled back as part of a deal where it would buy as much as 50 billion US agricultural products per year and start opening its markets to US companies.
Mr. However, Trump is reluctant to scale down all tariffs, and his advisers remain skeptical that China will live up to its commitments.
Henrietta Treyz, head of financial policy at securities firm Veda Partners, said that Hong Kong legislation raised the odds that the December tariffs will be introduced. She pointed to a series of caustic posts on Twitter written by the editor of The Global Times, a Chinese state-controlled publication, warning American farmers that the deal that Trump promised them was not yet complete.
"Tensions are increasing between the two nations, not disappearing," Treyz said. "The prospect of not reaching an agreement and demanding escalation from here remains quite real." back as part of the first phase of a trade agreement.
Economists at Goldman Sachs said in a note to clients this week that Hong Kong legislation was a potential "complication", warning that China's Foreign Ministry had promised "strong countermeasures" if such a bill were adopted.
Trade talks continued over the past year despite several tensions in US-China tensions, including the arrest of Huawei leader Meng Wangzhou in Canada and the sale of 66 F-16 to Taiwan this summer.
Mr. Trump, who rarely speaks about human rights, has not spoken about the bill, nor has he made strong statements in support of activists in Hong Kong . In June, he told Chinese President Xi Jinping that he would not publicly support the protesters as long as the trade negotiations continued.
While Trump's advisers are discussing how much tariff relief to offer in the first phase of a trade agreement, similar debates are playing out in China. The fact that the United States weighs so heavily on Hong Kong is likely to exacerbate internal tension.
"There is an ongoing debate in Beijing between reformers who want phase one and hard liners who are surrounded by hostile forces led by the United States, including in Hong Kong," said Michael Pillsbury, a China researcher at the Hudson Institute who advises the Trump administration.
Ed Wong and Catie Edmondson contributed to the reporting.