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Singapore: Limited direct impact from higher Section 232 tariffs on steel & aluminum
On 3 Jun, US President Donald Trump issued a proclamation to raise existing Section 232 tariffs on imports of steel articles and derivative steel articles, and aluminum articles and derivative aluminum articles from 25% to 50% with effect from 4 Jun although tariff rates on imports from the UK are subject to a different treatment following the US-UK trade deal on 8 May (The Guardian, 3 Jun).
While the direct impact on Singapore’s economy is likely to be minimal given Singapore’s low exposure to aluminum and steel exports, the spillover effects on Singapore’s key export partners and to the extent this could derail existing trade negotiations between US and its trading partners bears watching.
On the former, the higher Section 232 tariffs on US’ steel and aluminum imports could weigh further on manufacturing activity in Asian economies such as South Korea, India, Taiwan, China, Japan and Vietnam with spillover effects to Singapore via weaker external demand. On the latter, risks of a tariff reescalation exacerbated by the higher steel and aluminum tariffs (and other trade actions) cannot be discounted with China noting that the US has “severely” violated their trade truce (BBC, 4 Jun) while the EU warned that it could speed up retaliatory measures if President Donald Trump follows through on his tariff threats (Bloomberg, 2 Jun).
Jester Koh
Associate Economist
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