US tariffs impact could include global trade war; Singapore may downgrade full-year growth forecast: DPM Gan

Singapore does not intend to take countermeasures against US tariffs, even as the Republic’s growth outlook may be downgraded due to their impact, Minister for Trade and Industry Gan Kim Yong said on Thursday (3 Apr).

Rather, Singapore will engage its US counterparts to understand and address their concerns, he told reporters at a briefing.

This came after US President Donald Trump announced a blanket tariff of 10 per cent on all countries on Wednesday, including long-time allies and trade partners, as well as reciprocal tariffs on about 60 “worst offenders”.

“We are naturally disappointed that despite our strong and longstanding economic and commercial relationship with the US under the US-Singapore Free Trade Agreement (USSFTA), we are also subject to the same 10 per cent baseline tariffs,” said Gan, who is also deputy prime minister.
 

Singapore has “recourse” under the USSFTA to take countermeasures and seek dispute resolution, but has decided not to do so, he added.

“Imposing retaliatory import duties would just add cost to our imports from the US. This would affect our consumers and our businesses.”

Still, the 10 per cent tariff is expected to have a “significant impact” on Singapore’s economy, DPM Gan said, warning households and businesses to be prepared for “rough waters” ahead.

Noting that the last two Budgets have provided help to businesses and households, he added that the government will monitor the situation and introduce more measures if necessary.
 

Possible growth downgrade

Singapore’s government may downgrade its full-year growth forecast range of 1 to 3 per cent, given that the situation has “turned out to be worse” than expected when the projection was made.

But the revised forecast may not necessarily arrive with the release of advance first-quarter growth estimates, due no later than 14 April, he said in response to questions.

“The forecast will depend on whether we are able to complete our assessment.”

He added: “It’s important for us to do so very carefully, rather than to jump to conclusions – then you may mislead the market and businesses.”

As for whether Singapore will seek an extension on the 5 April tariff implementation date, DPM Gan said this is an “open question”.

For now, Singapore will engage US officials “to better understand their concerns and to see how we can work together constructively”.

On the likely economic impact, he said: “Our bigger concern, really, is the broader scope of impact that this series of tariffs may bring about in time to come.

“Because we can see that some countries are already announcing retaliatory tariffs, and if these tit-for-tat tariff measures continue, it may escalate into a situation where you end up with a global trade war.”
 

Seeking new opportunities

DPM Gan noted that Singapore already has 27 FTAs and will keep working with trading partners on groupings – such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership – to strengthen economic and trade ties with different regions.

“This will help us to open up more avenues for our businesses to explore and expand,” he said.
 

He added that the government will assess the impact on businesses before coming up with measures to help them.

For example, for companies that are able to look for alternative markets, the government may step in to help them gain access to these new markets, he said.

The government can also help them seek new areas of growth through digital economy or green economy agreements, and provide support for training, innovation, as well as research and development.

In a separate statement earlier on Thursday, the Monetary Authority of Singapore said it “stands ready to curb excessive volatility in the Singapore dollar” to ensure that the Republic’s foreign exchange and money markets remain “orderly”.
 

Source: The Business Times © SPH Media Limited. Permission required for reproduction.