SINGAPORE, April 28 — US tariffs will have multiplier effects that will “generate a broader negative income and demand shock to the Singapore economy”, the Monetary Authority of Singapore said in its macroeconomic review released today.
As well as the direct impact of a 10 per cent baseline tariff on Singapore’s exports to the US, its second-largest export market, there will also be indirect effects from the tariffs levied on other countries, the central bank said.
The MAS said the tariffs were a production tax on producers and exporters that would impact corporate incomes and profits and constrain aggregate demand in the city-state.
Singapore, which ran a trade deficit with the US last year, has a lower reciprocal tariff rate than other South-east Asian countries, although Washington has suspended these until July, with a 10 per cent rate currently applying across the board.
Singapore has said the pain of a US-China trade war would be felt everywhere, and the government has warned of uncertainty in its trade-reliant economy and the possibility of recession.
Earlier this month, the MAS eased monetary policy and the government downgraded its GDP growth forecast for the year to 0 per cent-2 per cent, with the effects of the tariffs cited as a key factor.
Singapore is holding a general election on May 3 amid this softening outlook, and cost-of-living pressures are high on the electorate’s minds.
The MAS said the US accounted for 11 per cent of the city-state’s exports in 2024, and estimated that about 55 per cent of shipments would be hit with the baseline 10 per cent tariff. Exports subject to product-specific tariffs, including steel, aluminium, and automobiles and parts, comprised around 5 per cent of shipments.
The MAS said that products such as semiconductors, consumer electronics and pharmaceutical goods, which are currently exempt from tariffs, accounted for about 40 per cent of exports to the US, noting the US administration “has initiated trade probes into imports of these goods on national security concerns and could impose restrictions in the coming months”.
Yesterday, trade minister Gan Kim Yong said Singapore was negotiating with the US for concessions on pharmaceutical exports to the US and for continued access to AI chips. — Reuters