Singapore unlikely to be on ‘hit list’ of direct US tariffs: Vivian
But the foreign affairs minister says the Republic’s small, open economy – of which trade is thrice the GDP – may yet be indirectly hit
SINGAPORE is unlikely to be on the “hit list for direct tariffs” from the United States, but the city-state could still be affected indirectly if there is any “degradation” in economic integration, global supply chains and world trade, Minister for Foreign Affairs Vivian Balakrishnan said in Parliament on Tuesday (Feb 4).
“I do not anticipate us being on the hit list for direct tariffs because... the United States has a surplus, as far as the trade balance with us is concerned,” he said in response to a question from Nominated Member of Parliament Neil Parekh.
Parekh asked several questions on Singapore-US relations, including the impact of fresh US tariffs on China, Mexico and Canada on Singapore.
Singapore could still face an indirect impact due to its small and open economy, of which trade constitutes three times its gross domestic product, Dr Balakrishnan added.
“I do need to prepare Singaporeans that it will be a turbulent ride in the months or years to come,” he noted.
New inflection point
He told the House that the world is now at a “new inflection point” that it has not faced for almost a century. He said the liberal world order after World War II has been characterised along three dimensions: domestically, usually by democracy and human rights; economically, by global supply chains and economic integration; internationally, by the development of international institutions, law, norms and rules.
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Such a world order has been “quite conducive” for Singapore’s progress in the last 60 years, he noted; however, it has been eroded because it has lost domestic political support in many parts of the world.
He characterised the relationship between the US and China – the most consequential in the world – as one with “a significant lack of strategic trust”, adding that this has led to a bifurcation and decoupling of the global economy.
Yet, it is not just the US and China, he said. The US’ ties with its own allies and neighbours are evolving, and the challenge lies in how Singapore and South-east Asia should respond, he noted.
“We believe there needs to be an omnidirectional engagement on our part, with all the multiple poles of power that are emerging.” He said that it means engaging with the US, China, India, the European Union, Africa and South America.
This is reflected in Singapore’s “intensive diplomacy and economic engagement” across the world, he noted, which includes the signing of multiple free-trade agreements (FTA).
In such an environment, Singapore has to continue to play a “constructive, inclusive role in a nimble way”, given its size, said Dr Balakrishnan.
“That means we have to be consistent, reliable and a trustworthy host to enterprises from all over the world, including the US and China.”
He added that Singapore will uphold the rule of law and sanctity of contract, and it will act decisively and firmly against individuals and companies that “flout the rules”.
“Let me rephrase that more colloquially,” he said. “It means playing it straight. It means saying the same thing to everyone, and it means doing what we say at a time of tension and instability and volatility.”
US-Singapore ties
In his assessment of bilateral relations, Dr Balakrishnan said Singapore and the US enjoy a “substantive, multi-faceted and very longstanding” partnership, the fundamentals of which have been nurtured across both Democratic and Republican administrations over the last 60 years.
Under the Joe Biden administration, ties were broadened, and both countries institutionalised cooperation in areas such as space, critical and emerging technologies and nuclear energy.
Last year, the two countries commemorated the 20th anniversary of the US-Singapore FTA. The agreement has helped triple bilateral trade since 2004.
Dr Balakrishnan said Singapore worked well with Donald Trump during his first term. Former Singapore prime minister Lee Hsien Loong made two visits to the US, once in 2017 and again in 2019. Trump came to Singapore for the US-North Korea Summit in 2018.
He added that Singapore looks forward to working closely again with Trump to further bilateral ties in the years ahead.
The US’ presence in the region has helped to provide security, stability and economic opportunities in the Asia-Pacific, he noted.
Other than being the largest source of foreign direct investment into Asean, it has also supported Asean economic initiatives and cooperated on emerging issues such as clean energy and cybersecurity.
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