Uncertainty + Deglobalisation = Less Investment<\/strong><\/h3>\n\n\n\nOne of the key ways that these tariffs could impact Singapore is by reducing the amount of foreign direct investment (FDI) that flows into the country.<\/p>\n\n\n\n
Looking at the potential global trade war that could ramp up, investors can also see it in the broader context of \u201cdeglobalisation\u201d or the reversal of globalisation that has occurred over the past 30 years or so.<\/p>\n\n\n\n
That opening up of markets and trade, also known as \u201cglobalisation\u201d, has seen massive amounts of FDI flowing into Southeast Asia, with Singapore being one of the biggest beneficiaries of that trend. Indeed, in the whole of 2023, Singapore\u2019s FDI flows hit $214 billion \u2013 up 9% from 2022.<\/p>\n\n\n\n
It\u2019s no coincidence that 2018 \u2013 the year that President Trump started to initiated serious trade tariffs against China \u2013 has been the only year (outside of Covid-19\u2019s 2020) that Singapore has seen a drop in FDI flows in seven-year stretch from 2016 to 2023.<\/p>\n\n\n\n
Foreign Direct Investment in Singapore 2016-2023 by Component (flows in S$ billions)<\/strong><\/h4>\n\n\n\n![\"\"](\"https:\/\/dollarsandsense.sg\/business\/wp-content\/uploads\/2025\/03\/FDI-flows-in-Singapore.png\")
Source:\u00a0Department of Statistics Singapore<\/a><\/em><\/figcaption><\/figure><\/div>\n\n\n\nIn other words, uncertainty in the global business environment is \u201cbad for business\u201d when it comes to investment into Singapore and its economy. Even worse, the US actually made up nearly half of Singapore\u2019s FDI in 2023 and is by far the largest source of FDI into the Singapore economy.<\/p>\n\n\n\n
If Singapore businesses receive less investment from abroad and American companies decide to retreat to investing more at home, this could damage Singapore\u2019s overall jobs market. Like stock markets, companies hate uncertainty and will be much less willing to invest if global rules can change in an instant.<\/p>\n\n\n\n
Reductions in investment in Singapore could translate into cuts in corporate budgets for hiring or expanding in the Asian market, including in Singapore.<\/p>\n\n\n\n
Foreign Direct Investment in Singapore for 2023 by top source economies (flows in S$ billions)\u00a0<\/strong><\/h4>\n\n\n\n![\"FDI](\"https:\/\/dollarsandsense.sg\/business\/wp-content\/uploads\/2025\/03\/FDI-flows-by-country.png\")
Source:\u00a0Department of Statistics Singapore<\/a><\/em><\/figcaption><\/figure><\/div>\n\n\n\nWorries Around Recession<\/strong> May Stem Foreign Direct Investment Flows<\/h3>\n\n\n\nThe big worry that has everyone on edge right now is the possibility of a recession, both in the US but also in economies around the world.<\/p>\n\n\n\n
With trade wars potentially igniting higher inflation and lower growth, Singapore \u2013 with its open and trade-dependent economy \u2013 could feel its most severe effects first.<\/p>\n\n\n\n
Singapore\u2019s Deputy Prime Minister Gan Kim Yong said as much in a recent speech about the potential impact of Trump\u2019s tariffs on key trading partners<\/a>. He mentioned that even if the whole of Asia is not directly impacted, the impact of rising tariffs and trade wars could \u201ccause major disruptions to supply chains and slow trade and investment flows<\/em>\u201d.\u00a0<\/p>\n\n\n\nIf a global recession was to come about in the next 12 to 18 months then Singapore\u2019s economy would likely see job losses and a slowdown in growth on the back of uncertainty. However, those results are typical of any recession and wouldn\u2019t be unique to Singapore\u2019s economy.<\/p>\n\n\n\n
Given the US is Singapore\u2019s second-largest trading partner (behind China), the potential of any further trade tariffs that upset global supply chains and business will certainly impact Singapore. <\/p>\n\n\n\n
The key consequences will be a reduction in investment into the economy \u2013 on the back of uncertainty \u2013 both from local and international companies as well as concerns that a ratcheting up of the trade war will plunge the global economy into recession.<\/p>\n\n\n\n
For Singapore, there may be a silver lining, with Finance & Insurance accounting for the lion\u2019s share of FDI flows. In fact, the sectors targeted by the tariffs, mainly manufacturing and potentially trade, make up smaller components of the overall FDI flows into Singapore. Nevertheless, a slowdown would likely have widespread impact on the overall economy and FDI flows.<\/p>\n\n\n\n![\"FDI](\"https:\/\/dollarsandsense.sg\/business\/wp-content\/uploads\/2025\/03\/FDI-flows-by-sector-1024x488.png\")
Source:\u00a0Department of Statistics Singapore<\/a><\/em><\/figcaption><\/figure>\n\n\n\n
In other words, uncertainty in the global business environment is \u201cbad for business\u201d when it comes to investment into Singapore and its economy. Even worse, the US actually made up nearly half of Singapore\u2019s FDI in 2023 and is by far the largest source of FDI into the Singapore economy.<\/p>\n\n\n\n
If Singapore businesses receive less investment from abroad and American companies decide to retreat to investing more at home, this could damage Singapore\u2019s overall jobs market. Like stock markets, companies hate uncertainty and will be much less willing to invest if global rules can change in an instant.<\/p>\n\n\n\n
Reductions in investment in Singapore could translate into cuts in corporate budgets for hiring or expanding in the Asian market, including in Singapore.<\/p>\n\n\n\n
Foreign Direct Investment in Singapore for 2023 by top source economies (flows in S$ billions)\u00a0<\/strong><\/h4>\n\n\n\nSource:\u00a0Department of Statistics Singapore<\/a><\/em><\/figcaption><\/figure><\/div>\n\n\n\nWorries Around Recession<\/strong> May Stem Foreign Direct Investment Flows<\/h3>\n\n\n\nThe big worry that has everyone on edge right now is the possibility of a recession, both in the US but also in economies around the world.<\/p>\n\n\n\n
With trade wars potentially igniting higher inflation and lower growth, Singapore \u2013 with its open and trade-dependent economy \u2013 could feel its most severe effects first.<\/p>\n\n\n\n
Singapore\u2019s Deputy Prime Minister Gan Kim Yong said as much in a recent speech about the potential impact of Trump\u2019s tariffs on key trading partners<\/a>. He mentioned that even if the whole of Asia is not directly impacted, the impact of rising tariffs and trade wars could \u201ccause major disruptions to supply chains and slow trade and investment flows<\/em>\u201d.\u00a0<\/p>\n\n\n\nIf a global recession was to come about in the next 12 to 18 months then Singapore\u2019s economy would likely see job losses and a slowdown in growth on the back of uncertainty. However, those results are typical of any recession and wouldn\u2019t be unique to Singapore\u2019s economy.<\/p>\n\n\n\n
Given the US is Singapore\u2019s second-largest trading partner (behind China), the potential of any further trade tariffs that upset global supply chains and business will certainly impact Singapore. <\/p>\n\n\n\n
The key consequences will be a reduction in investment into the economy \u2013 on the back of uncertainty \u2013 both from local and international companies as well as concerns that a ratcheting up of the trade war will plunge the global economy into recession.<\/p>\n\n\n\n
For Singapore, there may be a silver lining, with Finance & Insurance accounting for the lion\u2019s share of FDI flows. In fact, the sectors targeted by the tariffs, mainly manufacturing and potentially trade, make up smaller components of the overall FDI flows into Singapore. Nevertheless, a slowdown would likely have widespread impact on the overall economy and FDI flows.<\/p>\n\n\n\nSource:\u00a0Department of Statistics Singapore<\/a><\/em><\/figcaption><\/figure>\n\n\n\n
Worries Around Recession<\/strong> May Stem Foreign Direct Investment Flows<\/h3>\n\n\n\nThe big worry that has everyone on edge right now is the possibility of a recession, both in the US but also in economies around the world.<\/p>\n\n\n\n
With trade wars potentially igniting higher inflation and lower growth, Singapore \u2013 with its open and trade-dependent economy \u2013 could feel its most severe effects first.<\/p>\n\n\n\n
Singapore\u2019s Deputy Prime Minister Gan Kim Yong said as much in a recent speech about the potential impact of Trump\u2019s tariffs on key trading partners<\/a>. He mentioned that even if the whole of Asia is not directly impacted, the impact of rising tariffs and trade wars could \u201ccause major disruptions to supply chains and slow trade and investment flows<\/em>\u201d.\u00a0<\/p>\n\n\n\nIf a global recession was to come about in the next 12 to 18 months then Singapore\u2019s economy would likely see job losses and a slowdown in growth on the back of uncertainty. However, those results are typical of any recession and wouldn\u2019t be unique to Singapore\u2019s economy.<\/p>\n\n\n\n
Given the US is Singapore\u2019s second-largest trading partner (behind China), the potential of any further trade tariffs that upset global supply chains and business will certainly impact Singapore. <\/p>\n\n\n\n
The key consequences will be a reduction in investment into the economy \u2013 on the back of uncertainty \u2013 both from local and international companies as well as concerns that a ratcheting up of the trade war will plunge the global economy into recession.<\/p>\n\n\n\n
For Singapore, there may be a silver lining, with Finance & Insurance accounting for the lion\u2019s share of FDI flows. In fact, the sectors targeted by the tariffs, mainly manufacturing and potentially trade, make up smaller components of the overall FDI flows into Singapore. Nevertheless, a slowdown would likely have widespread impact on the overall economy and FDI flows.<\/p>\n\n\n\nSource:\u00a0Department of Statistics Singapore<\/a><\/em><\/figcaption><\/figure>\n\n\n\n
If a global recession was to come about in the next 12 to 18 months then Singapore\u2019s economy would likely see job losses and a slowdown in growth on the back of uncertainty. However, those results are typical of any recession and wouldn\u2019t be unique to Singapore\u2019s economy.<\/p>\n\n\n\n
Given the US is Singapore\u2019s second-largest trading partner (behind China), the potential of any further trade tariffs that upset global supply chains and business will certainly impact Singapore. <\/p>\n\n\n\n
The key consequences will be a reduction in investment into the economy \u2013 on the back of uncertainty \u2013 both from local and international companies as well as concerns that a ratcheting up of the trade war will plunge the global economy into recession.<\/p>\n\n\n\n
For Singapore, there may be a silver lining, with Finance & Insurance accounting for the lion\u2019s share of FDI flows. In fact, the sectors targeted by the tariffs, mainly manufacturing and potentially trade, make up smaller components of the overall FDI flows into Singapore. Nevertheless, a slowdown would likely have widespread impact on the overall economy and FDI flows.<\/p>\n\n\n\n