Market News

(Bloomberg) -- Global trade risks becoming a “bilateral arm-wrestling match” following President Donald Trump’s approach of slapping tariffs on its partners, according to Singapore’s Foreign Minister Vivian Balakrishnan.

Such an imposition may trigger a strong temptation from the other side to impose reciprocal tariffs. “Instead of a rules-based global system that promotes trade, you now have a system where every trade agreement becomes a bilateral arm-wrestling match,” he said in a fireside chat during the Aspen Security Forum in Colorado on Wednesday. “You end up in an escalatory spiral.”

Balakrishnan’s comments come as Trump said he would notify more than 150 countries of how much levies Washington would place on their exports, with 10% being the minimum. Singapore has yet to receive a letter from Trump, he added.

Singapore is heavily reliant on global trade and its exports are often seen as a bellwether for the health of Asian economies. The city-state this week reported faster-than-expected growth in the second quarter on strong manufacturing and services exports as businesses seek to front-run higher US tariffs.

The 10% tariff imposed by the US “does not quite compute”, said Balakrishnan, given that the US and Singapore have run a free trade agreement since 2004, with America running a trade surplus against the Southeast Asian nation.

Singapore’s Deputy Prime Minister Gan Kim Yong, who is also its most-senior trade official, will be visiting the US this month for trade talks that are expected to include discussions on pharmaceutical supply chains.