The Trump administration announced the decision hours after China said it would curb visas to some Americans heading to Hong Kong in response to an earlier move by the US.
The United States has ended sensitive defence exports to Hong Kong, further ramping up pressure in a row over the financial capital's autonomy from China.
The US announced the decision on Monday hours after China said it would curb visas to some Americans heading to Hong Kong, itself a response to a US move.
The United States has been leading a global uproar over a national security law which Hong Kong activists say will destroy the city's freedoms and was passed by China on Tuesday morning.
Export to Hong Kong or China?
"We can no longer distinguish between the export of controlled items to Hong Kong or to mainland China," US Secretary of State Mike Pompeo said in a statement.
"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 said, referring to the Chinese Communist Party.
The direct impact will be modest.
The Department of State last year approved $2.4 million in defence sales to Hong Kong, of which $1.4 million worth was actually sent, including firearms and ammunition for law enforcement, according to official figures.
The Department of Commerce simultaneously said it was revoking its special status for Hong Kong.
1997 promise of Hong Kong autonomy
It will now treat the financial hub the same as China for so-called dual-use exports that have both military and civilian applications – and which are highly restricted when sought by Beijing.
China promised autonomy for Hong Kong before Britain returned the territory in 1997 but wants no repeat of massive and sometimes destructive protests that rocked the territory last year.
"It gives us no pleasure to take this action, which is a direct consequence of Beijing's decision to violate its own commitments under the UN-registered Sino-British Joint Declaration," Pompeo said.
Tit-for-tat visa curbs
President Donald Trump's administration has already declared that Hong Kong is no longer autonomous in US eyes and has been rolling out a series of measures in response.
On Friday, the state department said it was restricting visas for an unspecified number of Chinese officials seen as responsible for infringing on the autonomy of the Asian financial hub.
In response, Chinese foreign ministry spokesman Zhao Lijian said Monday that the US "scheme... to obstruct the passage of the Hong Kong national security law will never prevail."
"To target the US's above wrongful actions, China has decided to impose visa restrictions against American individuals who have behaved egregiously on matters concerning Hong Kong," Zhao said.
While outlawing acts of subversion, secession, terrorism and colluding with foreign forces, the legislation will allow China's security agencies to set up shop publicly in the city for the first time.
Pompeo condemned the move on Monday evening.
"If China wants to regain the trust of Hong Kongers and the international community, it should honour the promises it made to the Hong Kong people," he said in a statement.
International concern over the new law
Britain, the European Union and the United Nations rights watchdog have all voiced fears the law could be used to stifle criticism of Beijing, which uses similar laws on the authoritarian mainland to crush dissent.
In Washington, some US lawmakers fear that Trump will take primarily symbolic action on Hong Kong, preferring to prioritise trade concerns that could affect his re-election campaign.
Last week, the US Senate unanimously approved a bill that would impose mandatory economic sanctions against Chinese officials, Hong Kong police — and banks that work with them — if they are identified as hurting the city's autonomous status.
Zhao, the foreign ministry spokesman, warned that the US "should not review, advance or implement relevant negative bills concerning Hong Kong, even less impose so-called sanctions on China, otherwise China will firmly take strong countermeasures."
Hong Kong was upended by seven straight months of protests last year, initially sparked by an eventually abandoned plan to allow extraditions to the mainland.
But they soon morphed into a popular revolt against Beijing's rule and widespread calls for democracy.
READ MORE: China passes Hong Kong security law