US President Donald Trump announced a new slate of tariffs on April 2, affecting Singapore, along with dozens of other US trading partners, in a "declaration of economic independence".

The far-reaching "reciprocal tariff" policy includes a 10 per cent baseline tariff on almost every country — including Singapore. China, a major exporter to the US, was slapped with an even steeper tariff at 34 per cent, which combined with the pre-existing 20 per cent, brings its total tariffs to a whopping 57 per cent.

Trump's surprise announcement sent global stock markets tumbling — S&P 500 companies lost a combined US$2.4 trillion (S$3.2 trillion) in stock market value while Japan's Nikkei 225 fell to an eight-year low during the trading session on Thursday (April 3), reported Reuters.

"We are naturally disappointed," said Deputy Prime Minister Gan Kim Yong in response to the tariffs, at a media interview on Thursday (April 3).

Singapore will not be taking any counter measures at the moment, according to Gan, but will instead try to engage the US and see how any concerns can be resolved.

"From Singapore's perspective, we will have to double down on our efforts to continue to keep our economy open, continue to uphold this open, fair, free trade among like-minded countries," he added.

The tariffs will make Singapore's exports to the US more expensive, but how will that affect Singaporeans?

Jobs

Speaking to AsiaOne, Sheana Yue, economist at Oxford Economics, a leading global economic advisory firm, said that the impact of Trump’s tariffs on the local job market is "not straightforward" and "will not be felt equally across all sectors".

Currently, there are sectors such as pharmaceuticals and semiconductors that are exempted from the tariffs — jobs in these sectors will "remain relatively secured" for the time being.

"Other manufacturing sectors will see a negative impact, although it might not be as massive as it first appears. That's because the tariff rate implemented on Singapore is the global minimum, giving Singapore a relative advantage," said Yue.

Nonetheless, higher tariffs will result in a lower US demand for Singaporean imports, which may lead to layoffs if the drop in demand for goods significantly affects local businesses.

This is particularly since Singapore is the most dependent country out of all Asean nations on exports, according to a report released by Standard Chartered on April 4.

Cost of living

A flash survey by the American Chamber of Commerce (AmCham) in Singapore in March found that 45 per cent of companies in Singapore plan to pass on the higher prices from US tariffs to their customers.

Cost increases, supply chain disruptions, and increased regulatory complexities are companies’ primary concerns, according to the survey.

Companies are likely to absorb the tariffs in the short term once they are implemented on Saturday (April 5), before they start to pass on the added costs to consumers and businesses.

The impact of tariffs is not directly related to the cost of living however, so the impact of Trump's tariffs is "not easily quantifiable", Selena Ling, chief economist at OCBC, told AsiaOne.

But the Singapore dollar has strengthened against the US dollar following news of Trump's tariffs, which bodes well for Singaporeans spending overseas, added Ling.

Bright spots

There are some potential benefits for Singapore as a result of the new tariffs.

Singapore faces a lowest tariff rate relative to neighbouring countries like Vietnam (46 per cent) and Cambodia (49 per cent), so US companies could start sourcing for Singaporean goods as an alternative.

This could boost businesses and support the creation of jobs in those sectors, both Ling and Yue said.

The full effects of Trump's tariffs will play out in the coming months, though there is uncertainty whether he will change his mind after telling Reuters that he would be open to negotiation if countries offer "something phenomenal". 

dana.leong@asiaone.com

For more original AsiaOne articles, visit here.