US tariffs could set off global trade war, dampen S'pore's economic growth: DPM Gan
Deputy Prime Minister Gan Kim Yong speaking at the National Press Centre on April 3.ST PHOTO: SHINTARO TAY
SINGAPORE – The US move to subject imports to wide-ranging tariffs will have a significant impact on Singapore and could escalate into a global trade war, Deputy Prime Minister Gan Kim Yong said on April 3.
DPM Gan, who is also Minister for Trade and Industry, was speaking to the media following US President Donald Trump's decision to impose a 10 per cent tariff on most goods imported into the US from Singapore and key partners, with higher duties for many other countries.
Analysts have said that the move could spark a global trade war and impact growth around the world.
"This 10 per cent baseline tariff on Singapore will have a significant impact on our economy," said DPM Gan.
"Our households and our businesses will have to be prepared for rough waters ahead of us."
Singapore is reassessing its growth forecast for 2025, and it is prepared to offer support to households and businesses if needed, he said.
"It is still early days, because some of the information is still not fully available, so we will need to take time to reassess, adjust, to see whether we need to recalibrate our economic forecast."
While the tariff of 10 per cent on goods from Singapore is less than that on goods from other countries, there will be an impact on growth if global trade and economic activity slows down significantly, DPM Gan noted.
He pointed out that some countries are already announcing retaliatory tariffs.
"If these tit-for-tat tariff measures continue, it may escalate into a situation where you end up with a global trade war. This will have a significant impact on the global economy," he added.
"It will affect trade flows. You will create choke points for supply chains, and also undermine the confidence of consumers and businesses. Investments will also slow down. All these eventually will significantly slow down the global economy. This will also, in turn, affect Singapore's economic outlook in the medium to long term," he said.
Singapore disappointed, will engage US to clarify concerns
DPM Gan told reporters that Singapore is disappointed with the US move because the two countries have had a longstanding economic relationship and a free trade agreement (FTA).
The Republic will therefore engage the US to understand how it has calculated the tariffs, and to clarify any misunderstanding that has led to the 10 per cent levy, he added.
"The US-Singapore FTA has been a very important FTA for both countries, and has benefited the US significantly. US imports to Singapore have enjoyed zero tariffs for more than two decades. They have also enjoyed a significant, substantial trade surplus with Singapore, amounting to $30 billion," he said.
"We are, of course, naturally disappointed."
"Under the FTA, we have recourse. We are able to take countermeasures and also seek dispute resolution. However, we have decided not to do so because imposing retaliatory import duties will just add costs to our imports from the US, and this will affect our consumers and businesses," he added.
"We will reach out and engage our US counterparts and better understand their concerns, see how we can work together constructively to address some of these concerns."
Meanwhile, Singapore will double down on efforts to continue to keep its economy open, and to uphold the prevailing system of open, fair and free trade among like-minded countries, said DPM Gan.
He noted that the Republic is currently part of 27 free trade agreements, which open up avenues for its businesses to explore a presence abroad and expand beyond Singapore's shores.
It will also engage its other trade partners, especially fellow Asean member countries, to see how they can work together to keep their economies ticking.
"Asean is a natural platform to have a conversation with our fellow ministers to see what we can do, how we can come together, to further deepen our integration," said DPM Gan.
For instance, Asean ministers can discuss how they can help support one another, he added, citing how some of these tariffs may cause supplies to be interrupted, and some countries may need to look for alternative supplies.
At the same time, Singapore will continue to work with like-minded partners across the world to strengthen the World Trade Organisation.
"It is very important for us to make sure that we continue to strengthen and preserve the multilateral system to the extent possible, because this will provide the basis for collaboration for international trade under a rules-based order," said the minister.
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