Singapore presses US over tariff impact

[SINGAPORE] Singapore agencies are in talks with the Trump administration about the 10% duty imposed by the US on its oldest free trade partner in Asia. "We are currently engaging our US counterparts to further clarify the full scope and application of its tariffs," Enterprise Singapore stated in an April 14 update to its "Frequently Asked Questions" section of a webpage dedicated to the 2004 US-Singapore Free Trade Agreement.

The 10% duty on goods from Singapore went into force on April 5. Enterprise Singapore, which is part of the Ministry of Trade and Industry, is in charge of assisting Singaporean enterprises in competing globally while also strengthening the city-state's status as a significant international business and commercial hub.

In a separate statement, Singapore's Ministry of Foreign Affairs (MFA) stated that discussions with the United States are underway. The issue arose during an introductory phone chat between Mr Albert Chua, Permanent Secretary for Foreign Affairs, and US Deputy Secretary of State Christopher Landau on April 8, during which they discussed the bilateral relationship, notably in the economic and defence sectors.

"Permanent Secretary Chua and Deputy Secretary Landau discussed the recently announced tariffs by the US and agreed that both sides would continue the ongoing engagement on this issue," stated an MFA official in answer to a question.

Singapore's concerns also stem from its deep integration into global supply chains, many of which intersect with the US market. Industry observers warn that the new tariffs could create knock-on effects across various sectors, particularly electronics and biomedical exports, which together made up more than 40 per cent of Singapore's total non-oil domestic exports to the US in 2024. Manufacturers are now evaluating alternative routing and distribution strategies to mitigate potential disruptions.

According to a Fox Business article on April 15, Singapore is one of many countries attempting to reach an agreement after President Donald Trump sparked worldwide fears and roiled global stock markets with his April 2 "Liberation Day" declaration of broad tariffs. In media interviews over the last few days, US officials have mentioned Japan, South Korea, Taiwan, India, Australia, and the European Union as among the 75 economies that have approached the White House. Aside from Singapore, Vietnam, Thailand, Indonesia, and Malaysia are reportedly in talks.

Singapore, as a free trade partner, has the authority to request an exemption from unilateral duties that violate both the language and spirit of the USSFTA, according to US-based analysts and former diplomats.

Legal experts have pointed out that the USSFTA includes provisions aimed at dispute resolution, including consultations and arbitration mechanisms. While Singapore has not indicated plans to invoke these formal steps yet, such options remain available should negotiations with the US stall. Analysts say invoking the dispute resolution chapter would mark a significant escalation, potentially bringing the issue to an international trade panel or arbitration tribunal.

Unlike many of its trading partners, the United States does not have a trade deficit with Singapore. In fact, in 2024, the US goods trade surplus with Singapore was US$2.8 billion (S$3.7 billion), up 84.8 percent from US$1.3 billion in 2023.

Mr Trump's April 2 declaration included a 10% duty on all nations, including free trade partners such as Singapore. In addition, he imposed reciprocal duties ranging from 11% to 50% on imports from more than 90 countries that have trade surpluses with the United States. Asian nations faced some of the highest levies, with Cambodia at 49% and Vietnam at 46%.

Trade economists note that the latest US tariff actions mark a continuation of the Trump administration’s 'America First' policy, which aims to reduce dependence on foreign manufacturing and prioritize domestic industries. However, critics argue that such blanket measures could backfire, particularly in high-tech industries where global collaboration is key. For small, trade-dependent economies like Singapore, the uncertainty and volatility in US trade policy create a challenging environment for long-term business planning.

A week later, in a dramatic turnaround, Mr Trump proposed a 90-day delay in tariffs as his team negotiate "tailor-made" accords with each country. What was not delayed was the 145% tariff on all Chinese imports, with the exception of cellphones and other electronics. In response, Beijing imposed 125 percent tariffs on American imports.

In the rush to the other countries' negotiating deadline in early July, the Trump administration conveyed the notion that the first movers would receive the best terms. Mr. Trump's press secretary, Karoline Leavitt, stated that over 15 transactions and offers are currently under consideration.

She did not specify which countries had made the offers, but stated that the transactions should take place "very soon". Treasury Secretary Scott Bessent is prioritizing Britain, Australia, South Korea, India, and Japan for the first few transactions, according to the Wall Street Journal on April 14, citing anonymous sources. Other media outlets have mentioned Vietnam as a possibility.

"As we have repeatedly stated, more than 75 countries have reached out," Ms Leavitt said during her media conference. "So we have a lot of work to do. We completely understand, but we also believe that we can announce some deals very soon."

Meanwhile, regional trade experts have warned that the ongoing negotiations risk creating a fragmented global trade framework, with bilateral deals replacing multilateral norms. Such a shift could erode the credibility of long-standing trade agreements like the World Trade Organization (WTO) system. For Southeast Asia, where economies are closely interlinked, the shift away from established trade rules could force nations to recalibrate their foreign economic policies.

She did, however, emphasize that China was not among the states discussing a new agreement. "The ball is in China's court." China needs to reach an agreement with us. "We don't have to make a deal with them," she explained.

"China's desire for the American consumer is similar to that of other countries, with the exception of its size. To put it another way, they need our money," she explained.

Apart from Mr Bessent, officials overseeing the negotiations include Commerce Secretary Howard Lutnick, trade adviser Peter Navarro, National Economic Council director Kevin Hassett, and US Trade Representative Jamieson Greer. The fast-paced negotiations come as Chinese President Xi Jinping extends his outreach to South-east Asian states on his current tour.

And China is retaliating. Trump officials slammed a Bloomberg story alleging that the Chinese government has instructed the country's airlines to cease accepting Boeing jet deliveries and buying airplane parts and other components from US companies. Boeing, one of the top US exporters, plans to ship approximately 10 737 Max aircraft to Chinese carriers. "They just reneged on the big Boeing deal," Mr Trump said on Truth Social in a post in which he threatened to defend American farmers against any moves by China to restrict commodity imports such as corn and soybeans.

On April 15, the Commerce Department also said that it would investigate how imports of medications, semiconductor chips, manufacturing equipment, and items containing them damage national security. Following a three-week period in which public comment will be sought, a new set of tariffs are likely to be implemented, with previously discussed rates of 25%. These tariffs would affect Singapore, as well as many other countries that sell semiconductors and medications to the United States.

In the past year alone, Singapore's exports of semiconductor-related equipment to the US reached nearly US$4 billion, according to figures from the Department of Statistics. Any new tariffs could raise costs for American tech firms relying on precision components from Singapore, especially in the manufacturing of advanced chips and data storage devices. Industry leaders in Singapore have urged a more collaborative approach, highlighting the mutual benefits of open trade in high-tech sectors.

More than 70% of the materials, or active pharmaceutical ingredients, used to manufacture medicines in the United States are produced in India, the European Union, China, and other countries. The United States consumes over 45 percent of all medications produced worldwide, more than any other country. The United States is also a big producer of semiconductors, albeit only in certain regions. Advanced chips are primarily imported from Taiwan and South Korea.