Facings the challenges of the US "tariff war", Singapore's export trade data in July was very poor, with two of Singapore's key industries, "semiconductors" and "pharmaceuticals", facing the risk of high tariffs imposed by the United States.

Singapore's official media, "Lianhe Zaobao", reported on the front page that due to the decline in non-electronic product exports, Singapore's non-petroleum domestic exports (NODX) turned from rising to falling, dropping 4.6% year-on-year in July, marking the weakest performance since October last year, which was worse than the 1% contraction predicted by Bloomberg survey.

Analysts pointed out that the weak exports in July were partially influenced by the high base effect from the same period last year, but as the August tariffs take effect, export pressure may intensify. If the United States further imposes tariffs on pharmaceuticals, the potential resistance faced by exports will increase further.

The Economic Development Board of Singapore released data on Monday (August 18) showing that exports to six of the top ten export markets declined year-on-year. The decline in exports to the United States was the most significant, at 42.7%, with pharmaceutical exports plummeting by 93.5%, far exceeding the 18.9% decline in overall pharmaceutical exports.

In response, Mr. Liu Tiancheng, Senior Economist at United Overseas Bank, told Singapore's official media "Lianhe Zaobao" that reciprocal tariffs and potential future pharmaceutical tariffs might be the main reasons. In addition, the higher base effect from the same period last year, as well as the concentrated shipments in June due to early shipping, could also lead to a drop in exports in July.

When interviewed, Lin Xiu Xin, Chief Economist at OCBC Bank, said: "Pharmaceutical tariffs have not yet taken effect. From a theoretical perspective, some pharmaceutical companies may have already moved part of their production back to the United States to avoid future tariffs, but this situation is currently difficult to confirm."

Other than the United States, non-petroleum domestic exports to China, Indonesia, Thailand, Malaysia, and Japan among the top ten export markets also declined, while exports to the 27 EU countries, South Korea, and Hong Kong saw growth.

The Economic Development Board stated that the decline in non-petroleum domestic exports in July was mainly due to non-electronic products, especially volatile categories such as pharmaceuticals, which were significantly affected by the high base effect from the same period last year. Electronic product exports remained stable.

Electronic product exports increased by 2.8% year-on-year in July, lower than 8% in June. Among them, personal computers, integrated circuits, and printed circuit boards contributed the most to electronic exports.

Regarding non-electronic products, exports fell by 6.6% year-on-year in July, compared to a 14.4% increase in June. The decline was mainly attributed to medicines, petrochemical products, and food.

Lin Xiu Xin pointed out that the July data indicates that even though electronic exports maintained positive growth, it was difficult to completely offset the weakness in non-electronic exports, especially given the continued weakness in pharmaceutical exports and the possibility of additional tariffs on pharmaceuticals in the United States.

President of the United States, Trump, has proposed that pharmaceutical import tariffs would first be imposed at a small rate and then gradually increased to 150% to 250%.

Cai Hanting, Senior Economist at DBS Bank, believes that the weak exports in July may indicate that exports in the second half of the year will be weaker than in the first half. "As the reciprocal tariffs in the United States take effect in August, external demand is expected to face pressure. Additionally, electronic and biopharmaceutical exports are vulnerable to changes in US semiconductor and drug tariffs, and related assessments are still ongoing," he said.

Lin Xiu Xin also mentioned that after the new tariffs took effect on August 7, the tariff resistance is expected to increase further. "Currently, the 10% baseline tariff the US imposes on Singapore is unlikely to change, but the real concern lies in the additional tariffs that semiconductors and pharmaceuticals may face," she added.

Liu Tiancheng analyzed that the 4.2% economic growth in the first half of the year was partly due to companies' early shipments before the tariff implementation and the support from manufacturing. However, this "replenishment effect" from early shipments may become a drag on economic growth in the second half, and combined with the impact of reciprocal tariffs, the pressure will increase further," he said.

Lin Xiu Xin expects that considering the year-on-year decline in non-petroleum exports in the second half, the total exports for the whole year will grow by about 2%.

Liu Tiancheng maintains his forecast of a 1% to 3% annual growth in non-petroleum exports, but due to the uncertainty of the tariff outlook, his confidence in this forecast has decreased slightly.

Original: www.toutiao.com/article/1840839612934156/

Statement: This article represents the views of the author."