Asian markets tumble; analysts expect S'pore to be hit badly by trade slowdown

Republic still faces threat of 25% tariff on US imports of semiconductors, pharmaceuticals

- Ovais Subhani

Markets tumbled across Asia after US President Donald Trump unveiled a universal tariff of 10 per cent on all imports into the US, including those from Singapore.

While Singapore avoided much harsher levies, such as a total of 54 per cent on China, 24 per cent on Japan and 25 per cent on South Korea, analysts believe that advantage will pale in comparison to the hit to Singapore's exports and growth outlook from a global slowdown in trade and demand for goods.

Also, there is still the lingering threat of a blanket 25 per cent tariff on all US imports of semiconductors and pharmaceuticals, which analysts said is still under consideration and may come later.

Dr Chua Hak Bin, co-head of macro research at Maybank, said that Singapore's free trade agreement and bilateral trade deficit did not completely shield it from the universal 10 per cent tariff, but protected the Republic from punishing reciprocal tariffs that many other Asian countries will face.

"Singapore will, however, be impacted by the massive deflationary shock to demand and trade. Manufacturing and exports will likely turn lower and contract in the coming quarters," he said, adding that Maybank is reviewing its forecasts for Singapore and may downgrade its 2.6 per cent gross domestic product growth prediction for 2025.

A deflationary shock refers to a situation where there is a sudden and significant decrease in the general price level of goods and services, leading to lower production, lower wages and lower demand from businesses and consumers.

The Ministry of Trade and Industry's full-year 2025 forecast for Singapore's economic growth stands at 1 per cent to 3 per cent. That is already slower than the 4.4 per cent growth achieved in 2024.

Mr Ang Wee Seng, executive director of the Singapore Semiconductor Industry Association, said the US reciprocal tariffs will throw into disarray cost management and investment plans of chipmakers worldwide.