[SINGAPORE] Singapore may or may not enter a recession this year, but its economic growth will no doubt be “significantly impacted” by the onslaught of tariffs wreaked by Trump, Prime Minister Lawrence Wong said in Parliament on Tuesday (Apr 8).
He echoed Deputy Prime Minister Gan Kim Yong’s comment last Thursday that the government is reassessing Singapore’s growth forecast of 1 to 3 per cent, adding that it will “likely revise it downwards”.
“Slower growth will mean fewer job opportunities and smaller wage increases for workers,” said PM Wong, who is also finance minister.
“And if more companies face difficulties or relocate their operations back to the US, there will be higher retrenchments and job losses.”
US President Donald Trump last Wednesday ordered a baseline 10 per cent import duty on all countries, with extensive reciprocal tariffs on 60 of the “worst offenders”. China on Friday retaliated with a 34 per cent reciprocal tariff, prompting fresh threats from Trump of an additional 50 per cent.
Singapore, too, is subject to a 10 per cent tariff, even though the Republic imposes zero tariffs on American imports and runs a trade deficit with the US.
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“We are very disappointed by the US move, especially considering the deep and long-standing friendship between our two countries,” PM Wong said.
“These are not actions one does to a friend.”
He also pointed out that the focus of the tariffs has been on the goods trade, which gives a partial picture.
“In fact, the US runs a surplus with many of its trading partners in services – exporting software services, education, entertainment, financial and business services to the world,” he said. “But this fact has been completely ignored.”
Economic impact
PM Wong told the House that he expects weaker global growth in the near term, which means external demand for Singapore’s goods and services will fall.
“The outward-oriented sectors will suffer the brunt of the impact,” he added.
He said that this includes manufacturing, especially segments such as electronics and semiconductors; biomedical science, which have higher export exposure to the US. Wholesale trade and transport will also be affected.
The global uncertainty and dampened sentiments will also affect service industries such as finance and insurance, he noted.
With the situation now fluid and prone to quick changes, PM Wong said that the government will set up a task force chaired by DPM Gan to help businesses and workers address the immediate uncertainties, strengthen their resilience and better adapt to the new economic environment.
In addition to Singapore’s economic agencies, the task force will include the Singapore Business Federation, the Singapore National Employers Federation and the National Trades Union Congress, he added.
“The government stands ready to do more, if and when necessary,” said PM Wong. “We have the resources to do so because of the financial discipline and prudence we’ve exercised over many decades.”
For now, the measures announced in Budget 2025 will provide support for any short-term strain, he said. This package of measures includes CDC and SG60 vouchers, utility rebates, as well as support through SkillsFuture and the SkillsFuture Jobseeker Support.
Wider implications
PM Wong said the government’s deeper worry is not the direct impact that businesses faces, but the wider implications for the global trading system and the world economy.
First, “reciprocal” tariffs are a fundamental rejection of World Trade Organization (WTO) rules, PM Wong pointed out.
He noted that a cornerstone of the WTO multilateral trading system is treating all other members equally, something that the US’ new tariff regime has repudiated with its “selective country-by-country trade relationships”.
If other countries adopt the same approach as the US, the rules-based trading system will unravel. PM Wong said Singapore may face greater pressures, since small countries have very limited bargaining power in one-on-one bilateral negotiations.
Second, the likelihood of a full-blown global trade war is growing, said PM Wong.
He noted that some believe the tariffs are a negotiating tool, but pointed out that once trade barriers go up, they tend to stay up. Even if some partial accommodations are eventually worked out, the uncertainty generated by such moves would dampen confidence and growth.
“In particular, it does not look like the 10 per cent universal rate is open for negotiation,” he said. “This seems to be the fixed minimum tariff, regardless of a country’s trade balance or existing trade arrangements.”
He added that there are other forces that could maintain the momentum for tariffs. For example, many European countries are eager to protect their critical industries, such as electric vehicles, green technologies and semiconductors, from Chinese competition.
The third implication is on the global economy, said PM Wong. He noted that business consumer confidence has already been hit, and international trade and investments will suffer.
He said multinational enterprises and local businesses based here also told Singapore’s economic agencies that even if they are not directly affected by the tariffs, they are worried about weakening demand from their customers.
Some, he added, have put new projects on hold while they assess the full implications of the tariffs.
The consequences extend far beyond economics, and countries are increasingly turning away from win-win cooperation and deeper integration, he noted.
One major concern is the US-China relationship, he said. “If the disputes escalate and destabilise (the) US-China relationship, the consequences for the world would be disastrous.”
“We must be mentally prepared,” he warned. “The predictable and rules-based order we once knew is fading. The new era will be more volatile, with more frequent and unpredictable shocks.”
Strategy ahead
In this new environment, Singapore must redouble its efforts to remain a key node in global flows, as well as a trusted business hub.
PM Wong said Singapore will forge closer ties with like-minded partners who share the Republic’s commitment to open and free trade.
“The US may have decided to turn protectionist, but the rest of the world does not have to follow this path,” he said.
“We will identify other partners to join us and work around this – to ensure resilience and maintain critical parts of our multilateral system, while laying the foundations for a possible new and different global system that could be achievable later,” he said.
He added that this is why he had made the effort to engage his counterparts in different countries over the past year, and many are keen on further economic cooperation in new areas in the digital and green economies.
Singapore will also work on strengthening collaboration and integration within Asean, he said, noting that a Special Asean Economic Ministers’ Meeting in Malaysia later this week will discuss further ways of strengthening intraregional trade.
