U.S. tariffs will trigger demand shock to Singapore economic system: MAS

SINGAPORE (Reuters) -U.S. tariffs could have multiplier results that can “generate a broader unfavourable revenue and demand shock to the Singapore economic system”, the Financial Authority of Singapore mentioned in its macroeconomic evaluate launched on Monday.

In addition to the direct affect of a ten% baseline tariff on Singapore’s exports to the U.S., its second-largest export market, there will even be oblique results from the tariffs levied on different nations, the central financial institution mentioned.

The MAS mentioned the tariffs had been a manufacturing tax on producers and exporters that might affect company incomes and income and constrain mixture demand within the city-state.

Singapore, which ran a commerce deficit with the U.S. final 12 months, has a decrease “reciprocal” tariff price than different Southeast Asian nations, though Washington has suspended these till July, with a ten% price presently making use of throughout the board.

Singapore has mentioned the ache of a U.S.-China commerce warfare can be felt in all places, and the federal government has warned of uncertainty in its trade-reliant economic system and the potential of recession.

Earlier this month, the MAS eased financial coverage and the federal government downgraded its GDP development forecast for the 12 months to 0%-2%, with the results of the tariffs cited as a key issue.

Singapore is holding a basic election on Might 3 amid this softening outlook, and cost-of-living pressures are excessive on the voters’s minds.

The MAS mentioned the U.S. accounted for 11% of the city-state’s exports in 2024, and estimated that about 55% of shipments can be hit with the baseline 10% tariff. Exports topic to product-specific tariffs, together with metal, aluminium, and cars and elements, comprised round 5% of shipments.

The MAS mentioned that merchandise comparable to semiconductors, client electronics and pharmaceutical items, that are presently exempt from tariffs, accounted for about 40% of exports to the U.S., noting the U.S. administration “has initiated commerce probes into imports of those items on nationwide safety considerations and will impose restrictions within the coming months”.

On Sunday, commerce minister Gan Kim Yong mentioned Singapore was negotiating with the U.S. for concessions on pharmaceutical exports to the U.S. and for continued entry to AI chips.

(Reporting by Xinghui Kok)