US baseline 10% tariff not ideal but Singapore 'can live with it': PM Wong

Business Times

4 days ago

[SINGAPORE] While the US' baseline tariff of 10 per cent is not ideal, it is a rate Singapore 'can live with', said Prime Minister Lawrence Wong on Tuesday (Jul 29).
While zero tariffs are preferred, the baseline rate is the lowest category, he noted. 'We can live with it, and we can still do business, and there are (and) will still be many opportunities for trade and investment with the US.'
Even as Singapore must 'be realistic and take the world as it is', it can also shape its own destiny, he said at a dialogue at an SG60 conference held by the Institute of Policy Studies (IPS) and Singapore Business Federation (SBF).
Beyond tariffs, the US is pulling back from upholding the global order, leading to a messier world with no leadership, he noted.
Asked by moderator and IPS director Janadas Devan if Singapore is helpless, PM Wong said: 'There is not much we can do to change these large, powerful forces, but at the same time, we are not passive bystanders.'
Singapore has the agency to shape its own destiny, he said. It can work to strengthen multilateral institutions; deepen partnerships bilaterally and in different groupings; and focus on Asean.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
On partnerships, for instance, Singapore is pushing for ties between the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the European Union. This is gaining traction, said PM Wong, adding that he hopes the partnership can be formalised.
In Asean, more can be done to strengthen integration, remove non-tariff barriers and create a single market.
'If we can remove all the unnecessary distractions like border issues and make sure that we have peace and stability to focus on concrete initiatives that can bring Asean together, we can make progress.'
Asean's per capita gross domestic product (GDP) is low at under US$6,000, but if it rises to US$10,000 or more, that would be 'a complete game changer for the region', he added.
Replying to an audience question about Asean's growing income gap, PM Wong said 'it does help when you have a bigger pie'.
Individual countries will have to try to uplift the poor, he added, noting that Singapore can share best practices as it has also tried hard to reduce income inequality.
The real benefits of AI
To a question on artificial intelligence (AI), PM Wong said Singapore 'should not rush headlong into AI' but harness it to benefit rather than replace workers.
Frontier technology may be impressive, but the true benefits come with broad-based adoption, he said,
He drew a parallel to the chemical industry. Germany was a pioneer at the start of the 20th century, but the US became the leader as it institutionalised chemical engineering in university: raising skills, embedding it within industrial processes and creating scale.
Singapore must think hard about how to encourage broad-based adoption, he added. 'Most of us use AI the way we use Google – that's not exactly the best way to use AI or to harness the potential of AI.'
More can be done, and the government aims to help businesses tap AI for transformation and productivity.
Acknowledging concerns about jobs, he said history has shown that 'jobs will disappear, existing jobs will evolve, but new jobs will get created' with new waves of technology.
Yet history may not guide the future, given how powerful AI is, he added. 'We also have to think equally hard about applying AI in a meaningful and deliberate manner that creates jobs for Singaporeans.'
Navigating the changed world will be a theme of the upcoming National Day Rally in August, said PM Wong. This is not just about immediate uncertainty, but preparing for the longer-term.
Some Singaporeans feel that 'the big moves have all been done because we went from third world to first', and that the country cannot advance much further, he noted. 'It's a misconception.'
That journey was a dramatic one, and that magnitude of change cannot be achieved again – at least not without going back down, he said.
Yet, there is still room for Singapore to progress, he concluded. 'The era of bold moves is over, but we have to take the same mindset of our pioneers, think boldly and chart a new way forward for Singapore that will continue to secure Singapore's future (and) keep Singapore exceptional.'