Singapore Refrains from Retaliation, But Faces Potential Economic Slowdown from U.S. Tariff Policy

As global economic uncertainty intensifies and trade barriers rise, the United States has announced a 10% tariff on all global imports. Although not targeted at specific countries, this move is expected to impact export-driven economies like Singapore. While the Singaporean government has made it clear that it will not retaliate, analysts warn that deteriorating external conditions could weigh on Singapore’s economic growth.

In late March 2025, the U.S. President signed a tariff bill imposing a 10% import tax on a broad range of global products, including machinery, electronics, and consumer goods. The U.S. government stated the move was to boost domestic manufacturing and reduce its trade deficit. However, many countries have expressed discontent.

Despite having a free trade agreement (USSFTA) and enjoying a trade surplus with the U.S., Singapore was not exempted. Singapore’s Minister for Trade and Industry, Gan Kim Yong, stated in early April, “We are disappointed by this decision, but we will not act rashly. Retaliation could raise costs and hurt businesses and consumers.”

Economic Implications

Although Singapore’s response is pragmatic, experts warn that as an open economy, the country may suffer indirectly from the spillover effects of U.S. policy.

• Weaker Global Demand: The tariff may trigger a global slowdown in trade, affecting Singapore’s export volume, especially in electronics and precision engineering.

• Higher Supply Chain Costs: The U.S. is a major end-market for Singaporean firms. Disruptions to trade patterns may force companies to reroute logistics, increasing costs.

• Erosion of Business Confidence: Rising uncertainty could dampen corporate investment, particularly among SMEs.

Early Economic Signals

A Bloomberg survey among economists shows that Singapore’s projected GDP growth for Q3 and Q4 2025 has been revised down from 2.1% to 1.3% and 1.6%, respectively. However, early inventory build-up in manufacturing may offer temporary support:

• In November 2024, the manufacturing PMI rebounded to 51;

• The electronics PMI rose to 51.6, indicating a short-term confidence boost.

Singapore’s Response Strategy

• Diplomatic Engagement: Singapore will voice its concerns through bilateral and multilateral platforms, such as WTO and APEC, while lobbying for exemptions.

• Supply Chain Diversification: The government is encouraging firms to diversify their markets and strengthen regional value chains.

• Upgrading Domestic Capabilities: Emphasis is placed on innovation, localized production, and tech adoption to reduce external reliance.

As a highly open and adaptive economy, Singapore continues to respond to global challenges with pragmatism rather than confrontation. While the U.S. tariffs may not directly harm Singapore in the short term, a broader global slowdown would still have ripple effects.

With proactive policy measures and industrial transformation, Singapore can turn adversity into opportunity and maintain its economic resilience and competitiveness in the Asia-Pacific region.