Latest Posts

Not Our Trump Card: Brace Yourselves For Tariff Impacts

Since US President Donald Trump announced his list of reciprocal tariffs, it has become a hot topic across the world, as many countries were targeted by this imposition. We have witnessed how these tariffs have caused disruptions to global markets and economic systems. With the US being the largest economy in the world, many countries are in negotiations with the White House in hopes of maintaining a mutually beneficial trade relationship.But before we go into how this will affect us, let’s explore what tariffs are and how they’ll impact civilians like you and me.What are tariffs?Tariffs are taxes imposed on products imported from foreign countries. They have been around since the founding of the USA, and their objectives are to protect local businesses, generate revenue, and serve as leverage for international trade negotiations or retaliation. President Trump called the day the tariffs were issued “Liberation Day” because he wishes to “liberate” the country from dependence on foreign supply chains. The percentages you see on the tariff board represent the tariff rates applied to the product’s value. For example, applying a 25% tariff to a $10 product would result in an additional $2.50 charge, bringing the total up to $12.50. The tariffs introduced a minimum 10% levy on all imports to the US. This baseline applies to countries such as the UK, Singapore, and Australia. However, 60 countries were imposed higher tariff percentages for exports to the USA, including Southeast Asian countries like Malaysia, the Philippines, Vietnam, and Indonesia. Take a look at the full list here.Who pays the tariffs?Importers or importing companies are responsible for paying the tariffs. However, they often pass these additional costs on to consumers by raising product prices, which increases the overall cost. However, US companies can request for exemptions if they believe that the tariffs would negatively impact their business, and if they have no other alternatives aside from sourcing products from another country.How will tariffs impact us?Due to the tariffs, American companies are expected to reduce imports from countries facing higher tariff rates. As a result, losing the American market could cause considerable damage to the economies of these countries. This could potentially lead to a recession, which could have significant societal repercussions such as:Risk of layoffsAs export demand reduces for the American market, local companies may struggle to maintain profit margins. A possible solution for that may be to reduce labour costs through employee layoffs. Industries that rely heavily on exports, such as palm oil, rubber, coal, and electronics, are susceptible to this threat. According to Singapore’s Prime Minister Lawrence Wong, who also serves as Finance Minister, global growth is likely to weaken if external demands for local goods drop. Moreover, if American companies face difficulties or relocate their operations back to the US, higher retrenchments and job cuts might follow. The Malaysian International Chamber of Commerce and Industry (MICCI) has also warned that 50,000 Malaysian jobs, mainly in the electronics, glove manufacturing, and automotive parts sectors, are at risk due to the possibility of lower production volumes.Possible price hikes for US-made productsOne of the most immediate consequences of these tariffs is the potential price hike for US-made goods. Due to globalisation, many American products rely heavily on other countries for manufacturing and production. If production costs rise because of higher import duties on components and parts, companies may be forced to increase the prices of their goods. Take Apple, for example. Most Apple products are manufactured in China, India, Japan, South Korea, Taiwan or Vietnam, all of which are subject to high tariff margins. In an interview with The Straits Times, Mei Yuan, assistant professor of economics at the Singapore Management University, mentioned that the reciprocal tariff imposed on these countries (especially China) may compel Apple to relocate its production. This shift could disrupt the global supply chain and make Apple products unavailable in some countries. As a result, this could lead to higher prices as they would have to compensate for the lower production output and increased operational costs. With these tariffs taking effect from April 9, it's important to understand how they are being implemented and the potential impact they could have on our society. While it’s still very early to draw conclusions, only time will reveal whether these tariffs will bring more challenges or benefits for the American people, and the world!