The announcement by President Donald Trump on May 29 that he will begin stripping Hong Kong of its special trade privileges and that he no longer considers Hong Kong to be separate from China has prompted global lawyers and international corporations to worry about the future of Hong Kong and their place in the city.

The move by the White House could jeopardize Hong Kong's long-held status as a global business and financial hub and may prompt global law firms and corporations to reconsider the need to have a base there. However, several global law firms are waiting for more details before making changes to their plans in the city.

Wendy Wysong, Hong Kong managing partner at Steptoe & Johnson LLP, said she and other lawyers at her firm had been busy speaking with clients to try to position themselves and find out the actual implications of the announcement. Steptoe, which also has an office in Beijing, opened its Hong Kong office in December of last year.

"This is just what we're here for. We love trying to solve our clients' issues and helping them navigate their way through so that they can continue to operate. But it's certainly a challenge," Wysong said.

Amanda DeBusk, Washington, D.C.-based chair of Dechert's global international trade and government regulation practice, said she anticipates major changes in U.S.-Hong Kong trade relations. The administration can completely alter the relationship or make targeted changes, such as imposing the same tariffs on goods from Hong Kong that the U.S. imposes on products from mainland China. He also could strip Hong Kong of its status gradually.

"It is obviously too early to say exactly what will happen," said Martin Rogers, Asia chair at Davis Polk & Wardwell, which is helping both U.S. and Chinese clients understand what is going on. "However, we are optimistic about the Hong Kong market moving forward … we are very much committed to our practice in Mainland China and in Hong Kong."

Lawyers are hoping the U.S. will not jeopardize its trade links with Hong Kong completely, given the importance of the city as a business partner. According to the office of the U.S. Trade Representative, the U.S. enjoys its largest trade surplus with Hong Kong—$31 billion in 2018. About 1,300 U.S. companies operate in the city, which acts as a key gateway for the flow of goods and technology between the U.S. and mainland China.

"Hong Kong companies act as importing agents on behalf of Chinese companies to procure U.S. technology and equipment. They also act as distributors or resellers on behalf of U.S. companies to sell their technology and equipment," said Casper Sek, a Beijing-based partner at Jin Mao Partners.

Keith Brandt, Hong Kong managing partner at Dentons, said businesses should wait and see the details of the legislation and any concrete U.S. actions before making any decisions.

"It would be folly to write off Hong Kong, now, with its known and deep-seated resilience for which it has been famed for so many years," he said.

But he noted that recent events may have decided Hong Kong's future.

"The last 10 days may have been a true inflection point and the moment we look back to observe that Hong Kong's future and destiny were irreversibly determined and fundamentally altered—from which there may be no going back."

Even if the special trade status is completely rescinded, Hong Kong's status as a global financial hub will not be undermined, said Will Cai, head of Asia capital markets at Cooley.

"The capital market transactions—IPOs and follow-on offerings—bear little relationship to tariffs and trade. And if U.S. regulators push Chinese companies away from the NYSE or Nasdaq, they are just making Hong Kong even more important," he said, referring to growing bipartisan support in the U.S. for Chinese companies to be delisted from the U.S. stock exchanges.

U.S. companies in Hong Kong will not be "running for the exits" despite Trump's announcement, said Tara Joseph, president of the American Chamber of Commerce in Hong Kong. She did, however, call on the Trump administration to provide clarity for the "many unanswered questions about how the U.S.-Hong Kong special status could be unwound." 

"This is an emotional moment for Americans in Hong Kong and it will take companies and families a while to digest the ramifications. … We love Hong Kong and it's a sad day," she said in a statement.  

The White House announcement followed Beijing's introduction of national security legislation for Hong Kong at its annual legislative meeting—a move that sparked a fresh wave of violent clashes between protesters and police in the embattled city. The legislation proposes to crack down on "separatist, subversive, infiltrative, or destructive activities" in the city as well as alleged foreign interference.

Under the "One Country, Two Systems" doctrine, Hong Kong has operated a legal and political system separate from mainland China. This arrangement means the city has enjoyed certain freedoms absent in mainland China, including an independent judiciary and freedom of speech, making it a popular place for business among multinationals in the region.

U.S. Secretary of State Mike Pompeo said in a press conference two days before Trump's announcement that he was reporting to Congress a determination that Hong Kong no longer had significant autonomy under Chinese rule. He also called the new Chinese law a "death knell" for Hong Kong.

"While the United States once hoped that free and prosperous Hong Kong would provide a model for authoritarian China, it is now clear that China is modeling Hong Kong after itself," Pompeo said.

On May 28, China's legislature approved the proposal, paving the way for the legislation to be finalized in the next few months before being implemented.