China's parliament this week approved a decision to create laws for Hong Kong to curb sedition, secession, terrorism and foreign interference. Mainland security and intelligence agents may be stationed in the city for the first time - moves critics say puts the city's extensive freedoms at risk.
Trump did not name any sanctions targets but said the announcement would "affect the full range of agreements we have with Hong Kong", including the U.S.-Hong Kong extradition treaty to export controls on dual-use technologies and more "with few exceptions".
China's Global Times, which is published by the People's Daily, the official newspaper of China's ruling Communist Party, said Trump's decision was a "recklessly arbitrary" step.
The Hong Kong government - which has a long history of working ties with U.S. counterparts distinct from Beijing - has yet to respond, although it warned on Thursday the move could be a double edged sword.
More than 1,300 U.S. firms have offices in Hong Kong and provide about 100,000 jobs. In the past decade, the United States' trade surplus with Hong Kong has been the biggest among all its trading partners, totaling US$297 billion from 2009 to 2018.
Britain, meanwhile, is prepared to offer extended visa rights and a pathway to citizenship for almost 3 million Hong Kong residents in response to China's push to impose national security legislation in the former British colony.