Singapore’s strategic position as a global trade hub means that while it may not face direct US tariffs, it remains vulnerable to economic disruptions caused by the escalating US-China trade war. Foreign Minister Vivian Balakrishnan recently assured Parliament that the city-state is unlikely to be on the US tariff “hit list,” yet analysts warn that indirect impacts could be significant.
Singapore’s Trade Relationship with the US
The United States enjoys a trade surplus with Singapore, with bilateral trade reaching US$131 billion in 2023. Given this, Washington has little incentive to impose tariffs on Singaporean goods. However, Singapore’s heavy reliance on global trade—accounting for over three times its GDP—means any disruptions in global trade patterns will have far-reaching consequences.
Alvin Liew, a senior economist at United Overseas Bank, emphasized that any downturn in the US, China, or ASEAN economies would impact Singapore’s economic stability. “We will not be shielded from a negative shock to the global trade environment,” he warned.
Rising Tensions: The Bigger Picture
Recent retaliatory tariffs between the US and China are exacerbating concerns. China has imposed new tariffs on US coal, LNG, and crude oil following Washington’s latest round of levies on Chinese imports. The global economy is already feeling the ripple effects, with concerns mounting over supply chain disruptions and a slowdown in international trade.
Trump’s latest trade policies differ from his first term, expanding beyond China to include a broader range of countries. According to Chua Hak Bin from Maybank, this shift increases the risk of Singapore being inadvertently caught in the economic crossfire.
Singapore’s Strategy for Stability
Singapore is proactively seeking to mitigate risks by strengthening trade ties with other global partners. The country has already secured trade agreements with key economic blocs, including the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Additionally, agreements with Mercosur and the Pacific Alliance ensure Singapore remains connected to markets beyond the US and China.
To navigate these turbulent times, Balakrishnan emphasized the importance of engaging with all major global powers, including India, the EU, and South America. While the road ahead may be unpredictable, Singapore’s diversified trade strategy positions it to weather the storm.
read about The Truth About Tariffs: Who Really Pays and How They Impact the Economy
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