Singapore’s close relationship with the US is now seeing new light in the wake of Donald Trump’s presidency which has spark debates, controversies, as well as curiosity. Products related to Trump are hitting new record in sales and the Singaporeans are as intrigued by the new American president as other global citizens. However, there are some key takeaways for the government from the Trump presidency, including a new administration and a new leadership style that we have not seen in the past. Trump will be taking a rightist, protectionist agenda forward which could hurt long time trade companions like Singapore. Is the situation too grave or is there light at the end of the tunnel? Let’s find out.
The rise of the right is crucial for international relations
The right is rising in almost all parts of the world. The world is becoming less predictable, which may startle the Singaporean economy which is used to a predictable Washington. After Trump’s election and Brexit, predictions are merely wishful thoughts as anything seems possible. This chaotic new international environment could leave smaller city-states like Singapore in a vulnerable condition. The country is currently under pressure to choose sides- the neighboring Asian giant China or the old friend and ally US. It is likely that Singapore must choose the American side and choose greater co-operation because of stronger trade relations.
What can Singapore expect?
Singapore has a massive trade surplus with America and it would come under the Trump radar sooner or later. Even if the Trump policies do not directly impact it, it would certainly have a significant indirect impact, enough to create chaos in the economy. Singapore needs to closely look at the Federal Reserve policies as Janet Yellen’s term will be expiring in February 2018. The volatility in currency markets will increase. Though Singaporean currency is significantly undervalued, it may escape the wrath as it is a very small nation and has a bilateral deficit with US as well.
US will be impacting Singapore more with its tax reforms as citizens will now get fewer incentives to hold their assets offshore. Singapore’s manufacturing sector and financial sector would take a hit. Singapore has long relied on taxation advantage to get foreign investment. Trump’s protectionism will be hurting the country more than trade policies as of now. However, if the border adjustment tax is imposed, then Singapore will be in deep trouble.
If Trump enacts on his trade protectionism by imposing high unilateral tariff for imported goods and gives incentives to businesses to stay in the US, Singapore will be in trouble. The good strategy right now is careful anticipation.
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