US tariffs on EU to hit Singapore's chemical and pharma sectors most: report

Singapore has strong trade relationships with the EU, supplying high-quality chemicals and pharmaceutical products.

US tariffs on the European Union could have a significant impact on Asia’s chemical and pharmaceutical industries, unlike previous tariffs on China and Mexico, which primarily affected the electronics and auto sectors, Nomura said.

In a report, Nomura noted this shift in focus means that different Asian economies will be exposed to trade disruptions in new ways.

Amongst the Asian countries, Singapore, and Japan are expected to be the most affected. Both nations have strong trade relationships with the EU, supplying high-quality chemicals and pharmaceutical products that are processed in Europe and exported to the US.

The bank said if the US imposes tariffs on EU goods, this supply chain could face disruptions, reducing demand for Asian exports in these sectors.

Beyond individual countries, the broader global supply chain could also face secondary disruptions. Many Asian economies play key roles in global value chains, meaning that even if their exports to the US are not directly targeted, they could still experience economic consequences from disruptions in EU-US trade flows.

This exposure to US tariffs on the EU contrasts with the effects of previous US trade measures. Tariffs on China and Mexico largely harmed Asia’s electronics and automotive exports, whereas the new tariffs on EU goods will disproportionately affect pharmaceutical and chemical industries in Singapore and Japan.

In response to these risks, Nomura said Asian economies may need to adjust their trade strategies.

This could involve diversifying export markets, negotiating new trade agreements, or increasing domestic production and investments to reduce reliance on US-EU trade flows.