[SINGAPORE] While the US has slapped a 10 per cent baseline tariff on all countries, this rate applies to only about 55 per cent of Singapore’s domestic exports to the US.
Another 5 per cent face higher product-specific tariffs: on steel and aluminium, as well as automobiles and parts.
The remaining 40 per cent of the Republic’s exports to the US have been exempted – for now. These include major exports such as semiconductors; other electronics and semiconductor equipment; pharmaceuticals; and energy, copper, lumber and minerals.
But this might change, warned the Monetary Authority of Singapore (MAS) in its twice-yearly Macroeconomic Report on Monday, where it gave the breakdown of these exports.
MAS noted that the US administration has begun trade probes into its imports of these goods, on national security concerns, and could impose restrictions in the coming months.
The US is Singapore’s second-largest export market, accounting for 11 per cent of Singapore’s domestic exports in 2024.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
On Apr 2, the US imposed a baseline 10 per cent tariff on all imports, as well as higher rates for certain countries.
A 90-day suspension of the higher-band tariffs was later announced for all trading partners except China. But the baseline tariff remains, along with a 25 per cent tariff on steel and aluminium, as well as automobiles and parts.
Direct and indirect impacts
In its report on Monday, MAS compared the increased global tariff rate to a “production tax” on Singapore’s producers and exporters.
The tariffs squeeze export margins, prompting companies to reduce production. This means less demand for factors of production, and may constrain aggregate demand in the economy.
Besides the direct impact of tariffs, Singapore is also affected via trade links with other tariff-hit countries – including China, its largest export market.
Singapore exports intermediate goods and services to China, which are then used in the latter’s exports to the US. If China’s exports to the US fall due to tariffs, so will demand for Singapore’s exports to China.
These indirect effects may also occur through other regional economies such as Asean, given Singapore’s role as a hub for production and trading supply chains, said MAS.
Beyond that, tariff uncertainty could cause a broader pullback in global consumption and investment spending, which will also hurt Singapore’s growth.
Firms are likely to hold back on investments, while households may reduce spending to buffer against possible income shocks.
