It seems like \s is matching the newline character,
Yes.

Tip #9 from the Basic debugging checklist: YAPE::Regex::Explain 

The regular expression:

(?-imsx:Hi\s*)

matches as follows:
  
NODE                     EXPLANATION
----------------------------------------------------------------------
(?-imsx:                 group, but do not capture (case-sensitive)
                         (with ^ and $ matching normally) (with . not
                         matching \n) (matching whitespace and #
                         normally):
----------------------------------------------------------------------
  Hi                       'Hi'
----------------------------------------------------------------------
  \s*                      whitespace (\n, \r, \t, \f, and " ") (0 or
                           more times (matching the most amount
                           possible))
----------------------------------------------------------------------
)                        end of grouping
----------------------------------------------------------------------

[download]
This works for your simple input: 
$line =~ s/Hi[^\n]*//;

[download]

In reply to Re: \s matches newline in regex? by toolic
in thread \s matches newline in regex? by Only1KW

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