Global stock markets and businesses have been thrown into disarray with the initial announcement, and subsequent pause, of US President Trump’s sweeping reciprocal trade tariffs.
While many had expected some targeted tariffs to be levied, the “Liberation Day” across-the-board tariffs, with a minimum 10% imposition on nearly all countries worldwide was a big negative surprise.
While the 10% tariff imposed on Singapore exports was the lowest, and may not seem that harsh, what is more concerning is how the broader tariff war will impact businesses both in Singapore and globally.
That’s why, in PM Lawrence Wong’s Ministerial Statement in Parliament on 8 April 2025, he insisted that he took no comfort in Singapore being in the lowest tier of trade tariffs, and instead, reiterated that any slowdown in the global markets will have detrimental effects on Singapore’s economic prospects.
We look at how the “reciprocal” US tariffs may impact Singapore businesses and economy.
Read Also: 5 Takeaways From PM Lawrence Wong’s Ministerial Statement About The Trump Tariffs
#1 Exposure to Non-US Goods
One of the big gripes of the current Trump administration is that there are too many goods entering the US. That upsets President Trump and his supporters as they want more consumer goods to be produced domestically in the US.
This desire can be seen in the fine print of the reciprocal tariffs. While exemptions have been carved out since the 2 April announcement, only non-US content of imported goods are subject to this 10% tariff – provided US content makes up at least 20% of the final exported product.
That means Singapore businesses exporting to the US will need to work closely with their customers in the US as the burden of proof of any claim on embedded US content is on the importer (i.e. US companies).
In terms of exports to the US, the immediate impact could be felt by those sectors that export a lot from Singapore to the US. These can include some of the more well-known industries in Singapore, such as electronics, semiconductors, pharmaceuticals, machinery, and precision instruments.
On the whole, the lower (relative) tariff of 10% imposed on Singapore could mitigate some of the near-term immediate damage.
Read Also: How Trump’s Tariffs Hurt Everyone. A Look Through The Lens Of Singapore & Johor
#2 Impact on Singapore’s Economic Growth
The more immediate concern for Singapore businesses is probably the impact on economic growth of Singapore’s economy. That’s because consumers – in this uncertain environment – may be starting to tighten their belts. They may want to save more for imminent rainy days, and, by spending less, the tariffs will have a multiple effect on demand. In turn, this global slowdown in demand could hurt Singapore’s economy.
On the back of the US Reciprocal Trade Tariff announcement, Singapore’s Ministry of Trade and Industry (MTI) has already downgraded its GDP growth projections for the Singapore economy in 2025 to 0% to 2%, from the previous range of 1% to 3%.
The previous MTI forecast was only made as recently as February and the new updated projection states that “business and consumer sentiments will also be dampened, thereby crimping domestic consumption and investments in many economies”.
In its updated forecast, the MTI also alluded to potentially weak consumer sentiment – that will no doubt hit businesses here – stating that “the spike in uncertainty may lead to a larger-than-expected pullback in economic activity as businesses and households adopt a ‘wait-and-see’ approach before making spending decisions”.
As investors all know, uncertainty can delay both investment and spending decisions and these reciprocal tariffs are injecting a lot of uncertainty into global markets. That uncertainty can also extend to services firms in Singapore, such as financial services, legal services and consulting.
Many of these professional services firms are US-based companies that could pull back on investment into the local Singapore economy as uncertainty stemming from US government policy is likely to continue.
Read Also: Trump Tariffs: 4 Sectors With The Biggest Losses On The STI
#3 Disruption of Global Supply Chains
Another big impact on Singapore’s businesses will be the disruption that these tariffs can cause to global supply chains.
As the city-state is a big global trading hub, if the country is used to bypass US tariffs (e.g. if Chinese goods are re-routed through Singapore), then companies here could face potential penalties, delays or extra regulatory scrutiny.
The same also applies to companies involved in logistics or re-exporting, as warehousing volumes could drop in a scenario where global trade flows shift significantly in way that’s negative for Singapore. As Singapore is home to the world’s busiest transshipment port and one of Asia’s largest cargo airports, this has the potential to adversely impact the Singapore economy and role in global supply chains.
Given how intertwined the regional (ASEAN) and global economies are, when it comes to supply chains, many Singapore-based firms supplying components to countries in Asia that face much higher tariffs, may see US demand for final goods dampened.
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