Singapore braces for economic impact as US tariffs loom

[SINGAPORE] Prime Minister Lawrence Wong said the current tariffs imposed by the United States will harm Singapore's economy, businesses, and people. "Singapore may or may not enter recession this year. But I am confident that our growth will be considerably harmed," he said. PM Wong stated that Budget 2025 measures will provide short-term relief, and a new task group will assist in addressing immediate uncertainties while the government continues to monitor the situation.

However, in the short term, global economy is projected to be weaker, resulting in lower foreign demand for Singapore's goods and services, he noted. Outward-oriented industries such as manufacturing, wholesale trade, and transportation will bear the brunt of the damage.

The tariffs come amid a broader shift in global trade dynamics, with the US increasingly favoring protectionist policies under the Trump administration. Analysts warn that such measures could trigger retaliatory actions from other nations, further destabilizing supply chains and investment flows. For Singapore, a trade-dependent economy, the ripple effects could extend beyond immediate sectoral pain, potentially reshaping long-term competitiveness in key industries like electronics and logistics.

PM Wong, who is also Finance Minister, stated in Parliament on April 8 that slower growth will result in fewer job prospects and lower income rises for workers. If additional corporations suffer difficulty or shift their operations back to the United States, there will be more layoffs and job losses.

PM Wong stated that the Trade and Industry Ministry, which had previously estimated GDP growth of 1% to 3% for 2025, is reevaluating "and will most likely revise it downwards". He was making a ministerial speech in reaction to US President Donald Trump's April 2 imposition of a series of worldwide tariffs, including a 10% charge on Singapore. The measures will take effect on April 9.

PM Wong stated that the government will continue to closely monitor developments and is prepared to do more if necessary. “We have the resources to do so because of the financial discipline and prudence we’ve exercised over the decades.”

Economists note that Singapore’s robust fiscal position and substantial reserves provide a critical cushion against external shocks. However, the prolonged uncertainty could dampen investor sentiment, particularly in sectors reliant on US-linked supply chains. The Monetary Authority of Singapore (MAS) has signaled readiness to adjust monetary policy if needed, though inflation remains a secondary concern compared to growth risks in the current climate.

The new task force, directed by Deputy Prime Minister Gan Kim Yong, will help firms and people deal with immediate concerns, increase their resilience, and better adjust to the changing economic environment, PM Wong said.

It will include economic agencies, the Singapore Business Federation, the Singapore National Employers Federation, and the National Trades Union Congress. For the time being, the measures announced in Budget 2025 will help to alleviate any temporary hardship.

These include CDC vouchers, SG60 vouchers, and U-Save refunds to aid with cost-of-living difficulties, while targeted initiatives such as expanded ComCare assistance will benefit the most needy populations.

Workers can also access SkillsFuture, and the involuntarily unemployed will be helped to get back on their feet through the SkillsFuture Jobseeker Support initiative, which will launch later in April, according to PM Wong.

Beyond immediate relief, experts emphasize the need for structural adjustments, such as accelerating digital transformation and diversifying trade partnerships. The Government’s push to deepen regional integration—particularly within Asean—could mitigate some losses, but the pace of adaptation will be crucial. Small and medium-sized enterprises (SMEs), which account for over 70% of Singapore’s workforce, are expected to face the steepest challenges in navigating the new trade landscape.

The Budget also included a number of initiatives to assist businesses, including as corporate income tax breaks, as well as schemes to increase productivity and competitiveness and aid in the transition to new markets.

"Our economic agencies are also engaging the firms impacted by the tariffs to better understand their responses, and see how we can support them, and assist them with any specific issues they face," added Mr. Trump. However, PM Wong added that the situation is still fluid and can change quickly.