US trade tariffs: Singapore needs to be prepared for a more troubled world, says SM Lee

Key Concepts:

• Trade War: Ongoing trade disputes, primarily between the US and China, characterized by escalating tariffs.
• MFN (Most Favored Nation): A principle of non-discrimination in trade, where countries treat all trading partners equally.
• Reciprocal Tariffs: Tariffs imposed on a country based on the tariffs that country imposes on the imposing country.
• Global Recession: A significant decline in economic activity spread across the global economy, lasting more than a few months.
• ASEAN: Association of Southeast Asian Nations, a regional intergovernmental organization.
• PAP: People's Action Party, the ruling political party in Singapore.
• Check and Balance: A system where different branches of government limit each other's power.

1. The Shifting Global System and Trade War:

• Senior Minister Lee Hsien Loong highlights that the current trade war crisis differs from previous ones due to a fundamental shift in the global system.
• The US, under President Trump, is disrupting trade and supply chains with sweeping tariffs, moving away from fair competition.
• These actions are perceived as a significant shock to the global system and could potentially lead to a global recession.

2. US Trade Policy and Motivations:

• The US administration aims to eliminate the US trade deficit, rebuild domestic manufacturing, and bring jobs back to the US.
• Lee Hsien Loong emphasizes that these goals are deeply rooted beliefs within the Trump administration.
• He anticipates that the US will continue to pursue these objectives and take further strong measures if initial actions don't yield the desired results.
• "So we must expect him to continue to pursue this objective and when he makes moves and the moves have not delivered results I think the result the the conclusion will not be to leave off but will be to continue to do more moves and to take further strong measures" - Lee Hsien Loong

3. Impact on Singapore and Global Trade:

• High tariffs could effectively halt trade between China and the US, significantly impacting global trade flows.
• Singapore can no longer rely on a stable and supportive external environment.
• The US is moving away from the MFN principle, seeking reciprocal tariffs and a fundamentally different world order.
• "What is different this time is that the US doesn't want MFN they want to dismantle the system they want to replace MFN with reciprocal tariffs meaning not I won't treat everybody equally i want to treat each p each partner one on one so it's a fundamentally different kind of world which the US is looking for and pushing for and the approach is not winwin but win lose" - Lee Hsien Loong

4. Singapore's Response and Preparedness:

• Singapore must strive to avoid a system collapse by promoting trade arrangements with like-minded partners like ASEAN.
• Practical efforts are needed to support households with rising costs of living and assist displaced workers.
• A task force has been established to help businesses navigate the uncertainties.
• Singaporeans must be psychologically prepared for a more troubled world.

5. Domestic Politics and Unity:

• Lee Hsien Loong addresses the role of the opposition in Singapore's democratic system, acknowledging their presence in parliament.
• He emphasizes the importance of electing a capable, committed, and honest leadership team that can effectively govern and defend Singapore's interests.
• He cautions that electing too many opposition MPs could weaken the government's ability to govern effectively.
• "But if voters keep on electing more opposition MPs even when the government is doing a good job then beyond a point it must weaken the government's ability to govern to form the best possible team for Singapore and to run this country the way Singaporeans have come to expect" - Lee Hsien Loong

6. Leadership Transition and Future Challenges:

• The upcoming elections are crucial, with PM Lawrence Wong leading the PAP for the first time, seeking his own mandate.
• Singapore has the resources and experience to navigate the crisis and emerge stronger.
• It's important for Singaporeans to understand the changes to the world order and take necessary actions to secure the future.

7. Ang Yiming's Role:

• Ang Yiming's resolution to stay and serve the labor movement has led to a close and symbiotic relationship with the government, especially during the pandemic.

8. Conclusion:

The speech emphasizes the severity of the current global trade crisis, driven by the US's shift away from established trade principles. Singapore needs to adapt by strengthening regional partnerships, supporting its citizens and businesses, and maintaining a united front. The upcoming elections are critical for securing a strong and capable leadership to navigate these challenges and ensure Singapore's future.