THE Monetary Authority of Singapore (MAS) has warned in its Monday macroeconomic review that the US tariffs will trigger wider negative repercussions for the Singaporean economy, impacting both income and demand.
Beyond the direct effect of a baseline 10 percent levy on its exports to the US, Singapore’s second-largest market, the country will also experience indirect consequences from tariffs imposed on other nations.
The central bank said these tariffs operate as a production tax, squeezing company profits and dampening overall demand in Singapore.
Despite having a lower reciprocal tariff rate than other Southeast Asian nations (currently suspended by the US until July), Singapore, which recorded a trade deficit with America last year, anticipates widespread disruption from the US-China trade conflict and the potential for recession in its trade-dependent economy.
This deteriorating outlook, partly attributed to the tariffs, prompted the MAS to ease monetary policy earlier this month, and the government subsequently lowered its GDP growth forecast for the year to between zero and two percent.
With a general election looming on May 3 and rising living costs a key concern, the MAS revealed that 11 percent of Singapore’s 2024 exports went to the US, with roughly 55 percent of these facing the baseline tariff.
A further five percent of exports are subject to specific tariffs on goods such as steel and cars.
While approximately 40 percent of exports, including crucial sectors like semiconductors and pharmaceuticals, are currently tariff-free, the MAS highlighted ongoing US trade investigations that could lead to future restrictions.
In response, Trade Minister Gan Kim Yong announced on Sunday that Singapore is actively seeking concessions from the US on pharmaceutical exports and access to AI chips.
-BTS Media
