Trump Tariffs' Impact on Singapore: The Good News and the Bad

The unloading of excess production from Asia will lead to lower prices in the short term, but wage cuts and job losses could follow.

- Vikram Khanna

Amid the turmoil of the global trade war, there will be one small mercy for Singapore consumers: bargain prices because of massive trade diversion from foreign exporters.

But the upside may not last. A likely growth slowdown, maybe even a recession later in the year, could take its toll on job and wage prospects.

Lower prices will result from several exporters, especially in the region, flooding markets with goods hit by US tariffs. Those tariffs will likely lead to sharp declines in US demand, leaving exporters with high levels of spare capacity and inventories.

With supply far exceeding demand, they will try to unload their products, amid cut-throat competition, at discounted prices in other markets, especially those with low tariffs, such as Singapore.

SINGAPORE BUYS BIG FROM ASIA A high proportion of goods consumed in Singapore come from China and South-east Asia, which face some of the highest tariffs imposed by the Trump administration.

The world's biggest exporter, China, has been slapped with US tariffs totaling 54 per cent, including so-called "reciprocal tariffs" of 34 per cent on April 2, which come on top of 20 per cent tariffs imposed earlier.

Vietnam—for which the US is its biggest market—has been bludgeoned with a 46 per cent tariff, while other South-east Asian countries have been hit by tariffs ranging from 17 per cent for the Philippines and 24 per cent for Malaysia, to 32 per cent for Indonesia, 36 per cent for Thailand and a whopping 49 per cent for Cambodia.

A high proportion of the food consumed in Singapore, such as rice, vegetables, fruit and seafood, comes from South-east Asia, China and India, with some coming from the European Union, the US, Japan and South Korea. Almost 30 per cent of clothing imports into Singapore come from China alone, while another one-third comes from the rest of Asia.