Since President Donald Trump came back to the White House, it has been a roller-coaster ride of emotions for investors, businesses as well as countries’ political leaders. That’s mainly down to the raft of new tariffs to be slapped on competitors and allies alike.
Singapore is one such ally. The city-state may not usually feature in headlines about global trade wars but it’s still been caught in the crosshairs of the US administration. It should also be noted that Singapore runs a trade deficit with the US, importing US$86.4 billion worth of goods and services while only exporting US$59.6 billion, as of 2024. Though, it should be noted that if we looked just at goods, the trade deficit is much closer – with imports at US$45.0 billion and exports at US$43.2 billion, as of 2024.
Nevertheless, the US government is keeping its 10% tariffs on a range of Singapore-origin goods. It highlights the fact that even trade-friendly nations like Singapore aren’t immune to larger geopolitical shifts.
But, more importantly, how will the tariffs impact Singapore workers and businesses.
Read Also: 5 Takeaways From PM Lawrence Wong’s Ministerial Statement About The Trump Tariffs
What Are These US Tariffs About?
It’s been over 4 months since President Trump first announced the surprise tariffs on 2 April 2025 – dubbed the Liberation Day tariffs. So, here’s a quick refresher.
The Liberation Day tariffs are essentially taxes placed on imported goods entering the US. They’ve been designed to protect American industries from foreign competition or to respond to what the US government deems as unfair trade practices, with particular ire reserved for China.
In Singapore’s case, a 10% tariff has been kept in place on products that include electronic components, precision engineering goods, semiconductors, and some chemicals. At the time, this was the lowest tier of tariffs placed on trading partners.
The targeted segments aren’t exactly small or insignificant for Singapore. In fact, they form the backbone of Singapore’s manufacturing sector, which employs tens of thousands of people and contributes around 22% to Singapore’s GDP.
Why Has Singapore Been Affected?
While Singapore isn’t directly being targeted by the US (in the same way that China is), it’s part of the wider global supply chain.
Many US tariffs today are part of a broader push by the Trump administration to “level the playing field” in trade, which the country thinks has become massively tilted in favour of China given its dominance of global supply chains.
Singapore, despite its strong reputation as a neutral and trusted trade partner, hasn’t been exempt but this move isn’t entirely new.
The 10% tariff was introduced previously during the Trump administration’s tariff hikes and has been rolled over into the current trade regime. The only difference now is that this 10% tariff will become a permanent feature.
The Impact On Singapore Businesses
The most immediate impact will be felt by Singapore’s export-oriented manufacturers. Many large companies (as well as small- and mid-cap listed firms) already have production facilities outside Singapore.
These centres tend to be clustered in countries such as Malaysia, Vietnam, and China. A lot of these manufacturing clusters tend to be focused on producing things such as specialty electronics components.
For Singapore-based companies exporting to the US, that extra 10% tariff cost gets baked into the selling price. Clearly, that will make them less competitive compared to a supplier from a US-based manufacturer. Products that are entirely made in a foreign country may be hit with even heavier tariffs based on which country the manufacturing plant is in.
Size Matters But There’s Also Help Available
In relative terms, Singapore exporters can still be competitive – versus other countries outside the US – because the lowest tariff rate any country can receive from the US is 10%. Whether any of these tariffs will actually push US firms to switch to US suppliers is a totally different question altogether.
For larger firms, they should be able to weather the tariff imposition better due to economies of scale. Smaller firms could see their operating margins and profits pressured but SMEs in Singapore are also being encouraged to explore new export markets, such as Thailand, India, the Middle East, and Mexico.
The Singapore Economic Resilience Taskforce (SETR) is also launching a Business Adaptation Grant – capped at $100k per firm – by October 2025 that aims to help SMEs adapt to this new tariff environment. Over the medium to long term, all this should help mitigate the impact from US tariffs.
Will This Affect Jobs In Singapore?
The manufacturing sector in 2024 employed about 350,000 people in Singapore, according to SingStat. A significant chunk of these jobs are in electronics and precision engineering.
That number was a drop from around 450,000 manufacturing jobs in 2021, highlighting the fact that even before these tariffs manufacturing jobs may have been moving elsewhere (i.e. places that were cheaper) and that more advance technology may already be in the adoption phase in the manufacturing to raise competitiveness.
If business slows further or the shift offshore accelerates, there’s a risk that local jobs, especially in production or assembly roles, could be scaled back.
However, Singapore has been proactive in helping workers upgrade their skills, especially through programmes like SkillsFuture and Workforce Singapore (WSG) initiatives.
As industries pivot toward advanced manufacturing, robotics, and Industry 4.0 processes, there’s also a shift in demand toward higher-value-add roles like engineering design, automation, and quality assurance.
Read Also: Complete Guide To The SkillsFuture Level-Up Programme (SFLP)
Navigating The New Normal
While a 10% tariff may not sound massive, it’s enough to cause a rethink for companies operating on tight margins. Singapore’s economy has always thrived on open trade and adaptability.
Yet, manufacturing is a sector that has seen contraction (in terms of number of jobs) in the past 3 to 4 years, even before the imposition of these Trump tariffs.
More importantly, for Singapore, is the services sector. That made up over 73% of GDP in 2024, according to the Ministry of Trade and Industry (MTI). And the services sector is also much, much bigger in terms of the amount of people employed.
In 2024, Singapore’s services sector employed over 2.9 million people – dwarfing the numbers employed by the city state’s manufacturing sector. At the end of the day, we have to remember that this 10% tariff is being imposed on physical goods only and not on services.
However, for workers in the manufacturing sector in Singapore, it’s clear that seismic shifts are occurring on a global scale – potentially outside of Singapore’s ability to impact. Jobs tied to low-cost manufacturing should become harder to defend, and so, it becomes more important for workers to shift higher up the value chain.
With the right support and skills, the Singapore workforce can continue to stay competitive in higher-value segments of the global economy.
The US tariff decision could result in Singapore adapting and repositioning itself in a world that’s constantly rewriting the trade rulebook.
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