Helping hand: Gan at an Asean ministers’ meeting in Kuala Lumpur. Singapore says it is also reaching out to companies exporting to the United States to better understand the impact and offer support if necessary. — Bernama
SINGAPORE: Singapore is looking into the possibility of a cap on the tariff rate, similar to those negotiated in the US trade deals with Japan and the European Union (EU), Deputy Prime Minister Gan Kim Yong says.
Gan was speaking to the media in Singapore after US President Donald Trump announced sweeping new tariffs last Thursday, including 100% duties on branded drugs imported into the United States with effect from Oct 1.
Singapore exports about S$4bil worth of pharmaceutical products to the United States, amounting to about 13% of its domestic exports to the United States and about 19% of overall pharmaceutical domestic exports.
Most of those exports are patented, branded drugs that will fall under the ambit of the latest tariffs.
A White House official had earlier told Bloomberg News that the tariffs on pharmaceutical imports will not apply to countries with negotiated agreements with the United States that contain provisions on drugs, such as the EU and Japan.
Gan said Singapore is taking a look at the trade deals to see whether they can be used as a precedence.
“It is something that is part and parcel of the discussion and negotiation between the United States and Singapore,” he said.
The White House official said duties on pharmaceuticals from the EU will be capped at 15% as per the terms of its framework deal. Japanese drugs will also be charged the rate spelled out in its pact.
In a Truth Social post, Trump said: “Starting Oct 1, 2025, we will be imposing a 100% tariff on any branded or patented pharmaceutical product, unless a company is building their pharmaceutical manufacturing plant in America.
“There will, therefore, be no tariff on these pharmaceutical products if construction has started,” he added.
Analysts said that exemption will come in handy for most of the top pharmaceutical exporters here, as they have already committed to building new US facilities.
Hence, tariffs are unlikely to have a significant impact on Singapore’s pharmaceutical exports in the immediate term.
Gan also expressed hope that many of the Singapore-based pharmaceutical companies will qualify for tariff exemption because they have ongoing investments in US manufacturing capacity.
Discussions with multinational firms in the pharmaceutical sector here also showed that the investments they are making in the United States will not be at the expense of Singapore.
“That is encouraging and comforting,” Gan said.
He added that Singapore’s main concern is the longer-term negative impact on the overall investment climate.
“Many of the countries who have entered into agreement with the United States have made investment commitments beyond just pharmaceuticals,” he said.
“Some of these investments, the resources, the funds could have been targeted at investing in Singapore and in this region, but now they have to be diverted to the United States in order to meet the demands.
“This in the longer term will shift the investment pattern, and the investment environment will become even more competitive,” he said.
Hence, Gan said, Singapore needs to double down on its investment promotion and target specific investments.
Gan said trade talks with the United States are ongoing, and they include tariffs on pharmaceuticals and the threat of levies on semiconductors.
“My last meeting with US Commerce Secretary Howard Lutnick was on Aug 19. Following the meeting, our officials have been in touch on both sides to work out the details and to exchange information and understanding and documentation.
“The negotiation will take time because there are many details that need to be worked out.
“And I am continuing my engagement with Secretary Lutnick, and I will give an update at an appropriate time,” he said.
He said the objective of the talks with the US administration is to be able to have an arrangement that allows Singapore to continue to be competitive in the US market.
“As to whether the tariff rate will be 15% or any other tariff is something that is part and parcel of the negotiation. But we do look forward to having some preferential treatment,” he said.
Singapore is currently subject to a baseline tariff rate of 10%.
Trump has also said that a 50% tariff on imported kitchen cabinets and bathroom vanities will be imposed.
Gan said: “We are also reaching out to the companies that are involved in exporting these items to the United States to better understand the impact on them, and to see how we can move forward, to support them, to help them if necessary.”
Analysts said the pressure on firms to re-shore manufacturing lines or build new facilities in the United States will weigh heavily on the flow of investments into pharmaceutical and other sectors.
Also, expansion of tariffs to sectors that were earlier exempted will infuse more uncertainty among investors and businesses worldwide.
Trump has repeatedly threatened to impose tariffs on import of semiconductors and other electronic goods that are so far excluded from any trade levies.
Business associations have expressed their concerns over the new tariffs, with the American Chamber of Commerce urging Singapore and the United States to keep trade and communication channels open to support economic prosperity, and secure supply chains and a stable business environment.
Analysts believe the scattershot of tariffs by the United States will not only force multinational companies to reconsider their investment plans but will also prompt them to tweak their global supply chains to manage costs and maintain competitiveness. — The Straits Times/ANN
