World suffers if US-China relations fray with tariffs: PM

There will be disastrous consequences for the world if disputes between the US and China escalate, destabilising the relationship between both countries, said Prime Minister Lawrence Wong.

- Tay Hong Yi

In a wide-ranging speech on the impact of US tariffs in Parliament on April 8, he outlined the potential impact of the Trump administration's move on US-China relations.

The US views China as a strategic competitor and threat to be dealt with now, while the US still has the advantage, he said.

He added: "China says it is ready for a tariff war, a trade war, or any other type of war. The US has now threatened an extra 50 per cent tariff on China, and China says it will fight till the end."

And there are fewer channels for dialogue, which can serve as guard rails to manage the relationship, he said.

"We must be mentally prepared. The predictable and rules-based order we once knew is fading," PM Wong said.

"The new era will be more volatile, with more frequent and unpredictable shocks. We must be ready to stand firm, and protect our interests, no matter how the external winds may blow."

America's tariff moves arise from a sense that the US has given away too much in allowing China to join the World Trade Organisation (WTO), and that China competes on an unfair basis by heavily subsidising its own companies and restricting market access to US firms, PM Wong said.

Such views may arise with people from hollowed-out towns in what was once America's thriving industrial belt, where jobs have disappeared and workers' incomes stagnated.

"They believe that the American economy is fundamentally broken," PM Wong said, noting that the US objectively continues to enjoy unrivalled economic heft in totality.

But America's concerns should be addressed within the WTO framework, he said.