Lecture Notes: Addressing Global Economic Changes Impacting Singapore

Key Points

• Global Economic Shift: The world is changing in ways that disadvantage small open economies like Singapore.
• US Liberation Day Announcement: Marks a significant change in the global order, signaling the end of rules-based globalization and free trade.

Historical Context

• US Role: Historically, the US was the champion of free trade, leading the creation of a multilateral trading system with clear rules and norms beneficial for global prosperity.
• World Trade Organization (WTO): Provided unprecedented stability; however, calls for reform to update these rules existed.

Current Situation

• US Policy Shift: The US is moving away from the WTO framework towards reciprocal tariffs on a country-by-country basis.
  • Impact on Singapore: Singapore placed in the lowest base tier, facing a 10% tariff.
  • Global Implications: Risk of other countries adopting similar protectionist measures, leading to potential marginalization of smaller nations like Singapore.

Potential Outcomes

• Trade Wars: Potential for a global trade war if other countries retaliate against US tariffs.
• Historical Parallel: Similar situation in the 1930s led to escalated trade wars and eventually the Second World War.

Strategic Response

• Singapore's Approach:
  • No retaliatory tariffs against the US.
  • Strengthening partnerships with like-minded countries.
  • Building capabilities and maintaining national reserves.

Conclusion

• Global Uncertainty: Increased unpredictability and instability in international trade.
• Preparedness: Singapore needs to be prepared for shocks, with an expectation that the former global stability is unlikely to return soon.
• Call to Action: Singaporeans urged to remain vigilant and united in facing upcoming challenges.