The existing trade conflict between the US and China not only harms the interests of these two countries and the rest of the world, but also threatens the multilateral trade system and the free trade principle.

According to the US Federal Statistical Office, China is a significant trading partner of the US. Jewellery products imported from China by the US amount to billions of dollars, US government data showed.

The jewellery, electronics and toy industries are all key areas that have been cultivated by Chinese and Hong Kong manufacturers for many years. The latest tariff measures imposed on these industries would mean an impact greater than ever on both countries.

Chetan Ahya, chief economist at Morgan Stanley, believes that if the trade war worsens and the US further raises tariffs on all Chinese goods for four to six months, the global economy could enter a full-blown recession. For China, the new round of tariff measures will also significantly increase risks in its economy, which could result in a decline in China's fourth-quarter gross domestic product.

Ricky Lam, CEO of Hong Kong-based jewellery manufacturer EJI O/B Elegance Jewellery International Ltd, believes that the impact of the trade conflict is only temporary. Other factors such as exchange rate and Brexit would also affect export trade.

“I think the jewellery industry needs to revolutionise its sales model. The Hong Kong jewellery industry's competitiveness lies in design and flexibility. Although jewellery production is mostly carried out in mainland China, design and quality control still rely on Hong Kong talents. The Hong Kong jewellery industry should strive to consolidate and strengthen its competitiveness in these two respects,” noted Lam.

Gabriel Acuna, owner of US-based emerald company Esmeralda Gems, agrees that American dealers place emphasis on the design and experience of Hong Kong manufacturers, even though many jewellers have set up factories and carried out production in China.

He further commented, “In the jewellery industry, the trading partners of US buyers are mainly Hong Kong manufacturers, while the direct impact of the trade war is on US retailers.”

He pointed out that lower-priced products will become more popular in the short term. “I am convinced that the US-China trade war is only temporary, and its impact will be more on the political side rather than economic side. I remain confident about prospects in the jewellery market.”

In addition, China has been rapidly developing its expertise in lab-grown diamond production in recent years, with the US as one of its major markets. Some industry players now believe that the additional tariffs imposed on China's imports due to the trade war would benefit India, which is also a major lab-grown diamond producer.