Businesses in Singapore \u2014 one of the most trade-exposed economies in the world \u2014 have been watching the fallout from Donald Trump’s ‘Liberation Day’ tariffs with apprehension.<\/p>\n
The city-state got off relatively lightly in the Trump tariff lottery: like Australia, it only faced a “baseline” tariff rate of 10 per cent in the new era of global trade.<\/p>\n
Also like Australia, the imposition of any tariff at all was despite the fact that it has a trade surplus with the United States, and a free trade agreement.<\/p>\n
But there has been uncertainty since the general tariffs were announced in April about the fallout from the new world order on the entrepot economy, and about the impact of sector-specific tariffs.<\/p>\n
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Singapore is subject to a 10 per cent US tariff but is exposed to the impact of higher rates on trading partners. (ABC News: Michael Franchi)<\/p>\n
Singapore PM wary of tariff fallout<\/p>\n
Those concerns came to a head when the US administration announced sectoral tariffs, with Singapore particularly vulnerable to new tariffs on pharmaceuticals<\/a>.<\/p>\n About 13 per cent of Singapore’s exports go to the United States, including about $US15 billion annually in branded pharmaceuticals.<\/p>\n The government shares the business community’s concerns.<\/p>\n Singapore Prime Minister Lawrence Wong told the ABC that “we do expect an impact on our economy” from the tariffs.<\/p>\n He remains hopeful that negotiations between officials could see the impact of the proposed US sectoral tariffs reduced.<\/p>\n Singapore Prime Minister Lawrence Wong expects the country’s economic growth to slow. (ABC News: Michael Franchi)<\/p>\n “Up to now, we’ve not felt the impact very much in the first half of this year,” Mr Wong said.<\/p>\n “That’s partly because many companies, I think, have been front-loading their activities.<\/p>\n “But we do see signs of business spending and confidence coming down.<\/p>\n “More than the tariffs alone, it’s the uncertainty that’s causing businesses to hold back any new investments.”<\/p>\n He said the tariffs would “surely impact the external environment”.<\/p>\n “Because we are so dependent on external demand, it will surely impact our economy in the coming months, including into next year.” Singapore has the opportunity to pick up business from companies looking to move manufacturing bases. (ABC News: Michael Franchi)<\/p>\n Drop off in economic growth expected<\/p>\n The official \u2014 and unofficial \u2014 expectation is that the impact of the new world of tariffs on Singapore directly, and indirectly through their impact on broader trade, will be a halving of Singapore’s healthy and consistent growth rate in recent years of about 4 per cent.<\/p>\n Economic growth figures released on Tuesday confirmed the reasons for concern.<\/p>\n The economy grew at an annual pace of 2.9 per cent in the third quarter of 2025, moderating from the 4.5 per cent growth in the previous quarter, according to the Ministry of Trade and Industry (MTI).<\/p>\n Economic growth in Singapore has been forecast to as much as halve. (ABC News: Michael Franchi)<\/p>\n It was a stronger growth result than the 2 per cent forecast by economists in a Bloomberg poll, but still markedly lower.<\/p>\n The Monetary Authority of Singapore has forecast growth to moderate from “this above-trend pace in the upcoming quarters as activity normalises in the trade-related sectors”.<\/p>\n Tariff uncertainty sees new orders stall<\/p>\n Jason Joo owns a small 3D printing company, Additive3D Asia, which makes different types of medical devices, which it ships around the world, as well as consumer products, engineering and automotive components.<\/p>\n “Around 40 to 50 per cent of our business is sending products to companies that are doing business with American companies and shipping to the US,” he told the ABC.<\/p>\n Jason Joo runs a small 3D printing business in Singapore. (ABC News: Michael Franchi)<\/p>\n Mr Joo said a lot of customers, and companies, were holding back orders due to both the economic uncertainty created by tariffs, and also uncertainty created by the ongoing negotiations between the Trump administration and different countries in the region.<\/p>\n South-East Asia has a history of highly mobile manufacturing bases responding to changing economic conditions \u2014 for example, sub contractors to Chinese manufacturers moving as comparative wage levels change between countries.<\/p>\n “We’re starting to see companies moving from the original source of countries, where they have been manufacturing their components or their finished products, and moving manufacturing nearer to them,” Mr Joo reported.<\/p>\n Mr Joo believes Singapore is in a good position to be providing those services, as well as just-in-time manufacturing.<\/p>\n ”Because Singapore is still at 10 per cent, it is not that bad. Customers are coming to Singapore manufacturing companies like us,” he said.<\/p>\n “But we still can’t compete with China due to the sheer size of their workforce and space.”<\/p>\n Small business owner Jason Joo believes Singapore can’t compete with the scale of the Chinese market. (ABC News: Michael Franchi)<\/p>\n US cracks down on attempts to avoid highest tariffs<\/p>\n There are risks in such strategies however, as the US is on the lookout for signs of goods that are being transhipped in exactly that way to avoid tariffs.<\/p>\n From pharmaceuticals to kitchen cabinets, Trump’s tariffs expand <\/a><\/p>\n Here are the countries and sectors most impacted by the tariffs from the Trump administration.<\/p>\n “China, even from the last set of tariffs, had redirected investments into Mexico, Vietnam and Malaysia,” said Stephen Miller, the president of the Australian Chamber of Commerce in Singapore.<\/p>\n “But those are now under scrutiny by the US authorities, so I think there’s a lot of caution around that”<\/p>\n Mr Miller echoed the concerns about how uncertainty could drag on the economic growth rate.<\/p>\n “Singapore does extremely well at high-end manufacturing and key components, so the areas that are being anticipated to be impacted will be pharma and med tech, as well as high-end electronics,” he told the ABC.<\/p>\n Mr Miller said the country was also “a fantastic logistics hub for the region and globally, and uncertainty doesn’t help that sort of area”.<\/p>\n Stephen Miller is the president of the Australian Chamber of Commerce in Singapore. (ABC News: Michael Franchi)<\/p>\n Professor Joseph Liow, of the National University of Singapore, said that whatever was going on within the Singapore economy as a result of tariffs, “there’s a larger dynamic at work as well” because of the regional disruption the tariffs were causing.<\/p>\n Some of the highest tariffs imposed by the Trump administration have fallen on Singapore’s neighbours with rates as high as 46 and 49 per cent.<\/p>\n Cambodia and Vietnam were both hit particularly hard because so many of their exports go to the US<\/a>: 40 per cent in the case of Cambodia and roughly a quarter for Vietnam.<\/p>\n Myanmar, Laos, Thailand, Indonesia, Malaysia, Brunei and the Philippines all faced heavy, but different, tariff rates.<\/p>\n Singapore is a key logistics and trading hub in South-East Asia. (ABC News: Michael Franchi)<\/p>\n Soul-searching for South-East Asian nations<\/p>\n There has been some soul-searching going on among South-East Asian nations about how they collectively respond to the challenge \u2014 particularly through the Association of South East Asian Nations (or ASEAN).<\/p>\n “We in South-East Asia also have to do our part to make ourselves a more attractive single market,” Mr Wong said.<\/p>\n “There’s still a lot of work to be done, because ASEAN is virtually tariff-free, but it’s not an easy place to do business.<\/p>\n “It’s complex. There are non-tariff barriers for investments and we have to work even harder to bring all these down.<\/p>\n “But there is a desire to do so amongst the leadership of ASEAN.”<\/p>\n RBA expects Trump’s tariffs to have ‘profound’ effect<\/a><\/p>\n RBA deputy governor Andrew Hauser says it could take years for the final effects of tariffs to become apparent, like after Brexit, and is surprised markets “shrug and move on”.<\/p>\n Mr Wong said the nations were working on bringing their economies closer together.<\/p>\n “Connecting up our payment systems, linking up infrastructure, so a whole host of projects that we are working on for which there will also be opportunities for Australia to participate in,” he told the ABC.<\/p>\n Professor Liow agreed, saying “it’s really a wake up call for the regional countries to say, ‘Look, as much as we want and should continue engaging with the United States, not only do we not want to put all our eggs in that basket, we want to maybe reduce the number of eggs in that basket and spread it around.'”<\/p>\n Joseph Liow is a professor at the National University of Singapore. (ABC News: Michael Franchi)<\/p>\n Then there is the uncertainty associated with another aspect of US policy \u2014 potential conflict over Taiwan.<\/p>\n According to Professor Liow, that carries problems with it even without actual physical conflict breaking out<\/p>\n “We don’t even need to think about kinetic conflict,” he said.<\/p>\n “Even if there is a very sharp downturn in relations \u2014 an economic blockade or whatever \u2014 that will already have quite a significant impact on the region simply because of how interconnected we are with East Asia in general and with Taiwan.”<\/p>\n China tightens rare earth export rules further<\/a><\/p>\n The issue has been a key sticking point in the trade war between Beijing and Washington.<\/p>\n He pointed to the risks around semiconductor supplies<\/a>, a story he said “everybody knows”.<\/p>\n “We don’t have to labour that point, but that is the situation that the region faces, so if something happens there, it’s very difficult for us to insulate ourselves from.”<\/p>\n Part of the risk will lie in the US and China demanding the South-East Asia region take a side, he warned.<\/p>\n “We certainly don’t want to. We would rather not,” Professor Liow said.<\/p>\n “We don’t want to be in that position, but that is a reality that we need to come to terms with.”Singapore and Australia upgrade strategic relationship<\/p>\n<\/p>\n
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