The Hong Kong Human Rights and Democracy Act requires sanctions against Chinese officials who are deemed to be violating freedoms and committing serious human rights abuses in the city.
It also requires a review of Hong Kong's autonomy from China, to determine whether the city should benefit from a special trading status with the US.
There are also provisions in the two bills that bar the export of non-lethal crowd-control weapons, like tear gas, to Hong Kong's law enforcement.
After the vote in Congress, China had called on Trump to veto the bills, and the country's Ministry of Foreign Affairs summoned US Ambassador Terry Branstad.
"Without question, the American people support the people of Hong Kong, and this law makes that abundantly clear to Hong Kongers, the international community, and the Chinese Communist Party," said Republican Senator Jim Risch, chairman of the foreign affairs committee.
Fellow Republican senator Marco Rubio also praised Trump for signing the document.
"The U.S. now has new and meaningful tools to deter further influence and interference from Beijing into Hong Kong's internal affairs," he wrote in a statement.
Senator Bob Menendez, the top Democrat on the Foreign Affairs Committee, said that signing the legislation into law "sends a clear and unequivocal message to the people of Hong Kong: We are with you."
Prominent Hong Kong pro-democracy activist Joshua Wong on Thursday called Trump's signing of the bill "a remarkable achievement."
2/ I still recall the bitter moment as we first lobbied the bill 5 years ago with @Jeffreyngo but the unwavering determination to defend HK's freedom drove us along this journey.