SINGAPORE - The tariffs imposed by the United States and China on products such as steel and aluminium imports, and vehicles and aircraft, have had a limited direct impact on the Singapore economy so far.
An analysis by the Ministry of Trade and Industry (MTI) estimates the tariffs to directly impact just 0.09 per cent of Singapore's exports to the world, Minister for Trade and Industry Chan Chun Sing said in Parliament on Friday (May 18).
He was replying to Mr Patrick Tay (West Coast GRC), who had asked about the impact of protectionist measures taken by the US and China on Singapore.
Still, Mr Chan added that Singapore is nonetheless closely monitoring the global developments, particularly for indirect effects on companies and workers in the long term.
Singapore's economic agencies are in close contact with companies that may be affected.
Singapore has also raised its concerns with the relevant US and China authorities, and is continuing to engage them, said Mr Chan, who stressed that Singapore is a strong proponent of free trade, and supporter of the rules-based multilateral trading system.
Said Mr Chan: "We remain concerned that an escalating cycle of expanding unilateral tariff measures will result in negative spill-over effects on global supply chains. Any disruption to global trade flows or trade volumes will affect big and small economies alike.
"We hope that countries will exercise restraint and avoid further escalation of tensions."
In response, Mr Tay said global economic developments that have caused uncertainty among local workers, particularly those in Chinese and US multi-national companies. This is further complicated by other issues such as a potential review of interest rates in the US.
Mr Chan acknowledged his concerns, and said that MTI staff and economists have been asked to conduct an in-depth study on the implications on a long-drawn or escalating trade war. The issue will require further study as the effects are complex and will affect Singapore on several levels, he said.
For instance, the imposition of tariffs, while not directed at Singapore, will cause global trade flows to shift, which will have knock-on effects on Singapore. Whether this will be positive or negative remains to be seen. Trade flows between and among other third parties will subsequently be affected by this, and will again impact Singapore, he said.
He said that Singapore, as an open economy, can hedge against these developments by expanding and diversifying its portfolio of investments and markets as a first order of business. MTI will also continue to monitor the trade developments, he added.