SINGAPORE (Reuters) -U.S. tariffs will have multiplier effects that will "generate a broader negative income and demand shock to the Singapore economy", the Monetary Authority of Singapore said in its macroeconomic review released on Monday.

As well as the direct impact of a 10% baseline tariff on Singapore's exports to the U.S., its second-largest export market, there will also be indirect effects from the tariffs levied on other countries, the central bank said.

The MAS said the tariffs were a production tax on producers and exporters that would impact corporate incomes and profits and constrain aggregate demand in the city-state.

Singapore, which ran a trade deficit with the U.S. last year, has a lower "reciprocal" tariff rate than other Southeast Asian countries, although Washington has suspended these until July, with a 10% rate currently applying across the board.

Singapore has said the pain of a U.S.-China trade war would be felt everywhere, and the government has warned of uncertainty in its trade-reliant economy and the possibility of recession.

Earlier this month, the MAS eased monetary policy and the government downgraded its GDP growth forecast for the year to 0%-2%, with the effects of the tariffs cited as a key factor.

Singapore is holding a general election on May 3 amid this softening outlook, and cost-of-living pressures are high on the electorate's minds. 

The MAS said the U.S. accounted for 11% of the city-state's exports in 2024, and estimated that about 55% of shipments would be hit with the baseline 10% tariff. Exports subject to product-specific tariffs, including steel, aluminium, and automobiles and parts, comprised around 5% of shipments.

The MAS said that products such as semiconductors, consumer electronics and pharmaceutical goods, which are currently exempt from tariffs, accounted for about 40% of exports to the U.S., noting the U.S. administration "has initiated trade probes into imports of these goods on national security concerns and could impose restrictions in the coming months".

On Sunday, trade minister Gan Kim Yong said Singapore was negotiating with the U.S. for concessions on pharmaceutical exports to the U.S. and for continued access to AI chips.