Republic must be prepared if trade war breaks out: PM Lee

SINGAPORE — The United States’ new attitude towards trade is unlikely to hurt Singapore, given that the world’s largest economy has a big trade surplus with the Republic. However, if a trade war breaks out, Singapore will be affected, Prime Minister Lee Hsien Loong said.

In his May Day Rally speech yesterday, he cited the US’ current stance as among the major downside risks even as things are looking up for the world economy.

Where previously the US took a multilateral, win-win attitude towards trade, it is now “talking tough on trade” and focusing on bilateral trade balances — targeting countries one by one. It views trade as “win-lose”, Mr Lee noted. “If you win, that means I must have lost something. If the US has a trade surplus with another country, that is as it should be. But if the US has a trade deficit with another country, then that country must be playing unfair.”

With China, the US has a huge deficit, pointed out Mr Lee, and now it wants to sell more to China, not to buy less.

It is good if one can “talk tough” and win a better deal in a negotiation. “But if you talk too tough and as a result if you sour the trust and the relationship and the cooperation, then that is a lose-lose outcome,” Mr Lee said.

For now, the other countries want to stay open to trade, and world leaders are “saying the right things”. But the situation could sour quickly once they get into a tit-for-tat fight, he warned.

If a trade war breaks out, even if Singapore is not directly involved, it will be affected, given the trade-dependent nature of the Republic’s economy. And Singapore must be prepared for this, even though the US “should not have an issue” with the Republic directly, given that the US has a big trade surplus with Singapore, Mr Lee said.

On bilateral ties, Mr Lee — who had a “good phone call” with US President Donald Trump on Sunday night — said relations with the US remain “very friendly”. He added that he has accepted an invitation by Mr Trump to visit the White House, and he hopes to make the trip some time this year. Tan Weizhen