Businesses positive but edgy on Trump approach to Asia

Observers await more policy details before reaching conclusions

Indian sand artist Sudarsan Pattnaik gives the final touches to his sand sculpture of US President Donald Trump at Puri beach, on Jan 19, 2017. PHOTO: AFP

Business leaders and other observers here are broadly optimistic - but a little uneasy too - over how President Donald Trump's policies are likely to affect Asia and Singapore.

A number of them want to see more details of the new Presi- dent's policies first before reaching any conclusions.

In the lead-up to Mr Trump's inauguration yesterday, one major talking point was whether his administration will prove to be disruptive to US-Asia trade as expected, given his anti-trade campaign rhetoric.

Discussions on the Trump era were held yesterday at a closed-door event organised by the Singapore Business Federation and American Chamber of Commerce in Singapore.

When contacted, SBF chief executive Ho Meng Kit said those present were broadly optimistic.

"The speakers noted that while there are risks that Trump may trigger increased trade tension, particularly against China, there won't be an open trade war because it will be in the US' interests to maintain its engagement with fast-growing Asia," Mr Ho told The Straits Times.

He said Singapore businesses do not expect to be hit by new tariffs even if the Trans-Pacific Partnership deal is scuttled, as the US-Singapore free trade pact is already in place - and because the US has a trade surplus with Singapore.

Mr Trump has pledged to "make America great again" by improving the US' trade terms, through negotiating fair trade deals and potentially ramping up import tariffs for Chinese goods.

There are risks of a US-Asia showdown, but there is no need to panic, banking giant Credit Suisse said in a note this week. "The eventual objective of any policy action by the US remains renegotiating trade terms with Asian economies, particularly China. Barring a major escalation of events into a trade war or a military conflict, we believe any eventual economic agreement between the US and Asian countries would be a positive for regional economies and remove market uncertainties."

Mr Thomas Chua, president of the Singapore Chinese Chamber of Commerce and Industry, said Singapore has a role to play. "Singapore, as a major trading hub between the US and Asia, will continue to be an important channel for US companies."

He added: "Most importantly, businesses cherish a stable business environment. We hope that Mr Trump's policies will help promote a predictable world order that is conducive for businesses."

Mr Trump is also widely expected to roll out fiscal stimulus and tax cuts - both positive for domestic US growth which would, in turn, give the global economy a lift.

This has spurred a bout of "Trump trade" on stock markets, including Singapore, where the Straits Times Index has gained 8 per cent since the US election on Nov 8.

Still, that enthusiasm "is slowly fizzling out", as Mr Trump disclosed no such plans in his pre- inauguration press conference last week, DBS noted in a report.

"It might be unrealistic for (Mr Trump) to give a full account of his economic agenda in the first press conference. Time will tell if he will make good on his campaign promises, but it is certainly premature to hail the end of the Trump trade."

Mr Ho said: "Ultimately it is still too early to make a call. We think it will take six to 12 months before we have full clarity on what Trump means for us."

Follow ST on LinkedIn and stay updated on the latest career news, insights and more.

A version of this article appeared in the print edition of The Straits Times on January 21, 2017, with the headline Businesses positive but edgy on Trump approach to Asia. Subscribe