The United States began on Monday eliminating Hong Kong’s special trade status and halting the export of sensitive military equipment and technology to the territory, hours prior to China’s enforcement of national security law on the battered international financial hub.

“The United States will today end exports of US-origin defense equipment and will take steps toward imposing the same restrictions on US defense and dual-use technologies to Hong Kong as it does for China,” Secretary of State Michael Pompeo said in the statement, citing China’s imposition of the national security law as the reason for the move.

“We can no longer distinguish between the export of controlled items to Hong Kong or to mainland China. We cannot risk these items falling into the hands of the People’s Liberation Army, whose primary purpose is to uphold the dictatorship of the CCP by any means necessary,” he wrote.

“Our actions target the regime, not the Chinese people. But given Beijing now treats Hong Kong as ‘One Country, One System,’ so must we,” Pompeo also warned of additional measures to come.

US Secretary of Commerce Wilbur Ross announced in a separate statement on Monday that the States was suspending “preferential treatment to Hong Kong over China, including the availability of export license exceptions.” Further actions are being evaluated, he added.

“Xi Jinping and his Communist thugs must face severe consequences for crushing Hong Kong's freedoms. The administration should consider all options to deny Beijing the benefits of Hong Kong's special financial & economic status,” US senator Tom Cotton wrote on Twitter.

In response, Hong Kong Chief Executive Carrie Lam estimated the sanctions would only cause some “inconveniences”, despite not knowing the details yet. Relevant industries could find replacements from other parts of the world and Hong Kong’s goal as an innovation hub would not be seriously affected, she stressed.

“Any action on sanctions will not scare us,” said Lam, adding that her administration would fully cooperate if Beijing enacted countermeasures.

Speaking during a radio interview, information technology lawmaker Charles Mok said research institutions and high-end equipment would be most affected by the restrictions. It would not affect the sale of computers and mobile phones, even the cost might rise, he added.

The technology sector’s biggest worry was how the restrictions would affect communication and encryption technology, said Keith Li, vice head of the Hong Kong Wireless Technology Industry Association.

A ban on direct import of technical parts such as routers and phones would affect consumer products involving the said technology, which would then leave Hong Kong with no choice but to source replacements from China, he told Commercial Radio. The sanctions might not directly affect the Hong Kong government and local corporations, but would have a huge impact on Huawei, the Chinese tech giant that supplies equipment to them, he added.

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