SINGAPORE - The Republic is facing significant challenges as a result of tariffs imposed on the goods it exports to the United States, but the Government has the fiscal resources to get through the crisis.
Speaking at the first meeting of the Singapore Economic Resilience Taskforce (Sert) on April 16, Minister for Transport and Second Minister for Finance Chee Hong Tat said the Government will provide the necessary support for businesses and workers to tide them over the difficult period.
He said: “If it is necessary for us to do so, we will provide for our companies, for our workers and for Singaporeans.
“We are able to make that commitment because over the years, we have planned our fiscal resources carefully, and we do have the surpluses, including past reserves, to allow us to be able to do this,” he added.
This was demonstrated during the Covid-19 pandemic when the Government tapped past reserves with the agreement of Singapore’s then President Halimah Yacob.
Singapore first tapped its reserves in 2009, taking out $4.9 billion to support the economy during the global financial crisis. Over a decade later, it drew on the reserves during the pandemic, between 2020 and 2022, using about $40 billion.
In fiscal year 2024, Singapore had a budget surplus of $6.4 billion.
Mr Chee said that the Government can bring forward the start date of some of the measures to help businesses and workers if necessary.
“We can take a look at the criteria, the scope of coverage, the eligibility criteria, to see whether more people and companies can qualify... and assess whether further intervention will be required, and we can size up how much more resources we will need to put in,” he said.
However, he stressed that the Government does not want to “prematurely say whether that is a scenario that will be necessary or not”.
“I think what will give our businesses, workers and Singaporeans the confidence is that should the need arise, we have the past reserves... to give confidence to Singaporeans and overseas investors that we do have the resources... to get through this crisis together,” Mr Chee said.
Asked how far the Government is willing to go in terms of its fiscal support for businesses and workers, Mr Chee said the Government will look at schemes as a “continuous effort”.
“It is not just to throw money at the problem,” he said.
“It is to help them through the funding to become more competitive, for the workers to become better skilled, so that in the new global environment, regardless of how the supply chains are going to shift, our companies and our workers will be better equipped and more ready to seize those new opportunities.”
Minister for National Development Desmond Lee added that even as the Government confronts the immediate challenges, it must ensure that Singapore and its workforce stay competitive in a very different economic order in the mid-to-long term.
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Strategies to strengthen Singapore’s economic resilience include helping businesses to explore new markets and diversify their supply chains; strengthening Singapore’s transport and finance hub status; ensuring the city’s continued attractiveness to investors; re-energising companies and the workforce to overcome land and labour constraints, as well as new partnerships.
Mr Chee said these can help Singapore continue to generate the fiscal resources that it will need to strengthen its social safety nets and social compact.
Both Mr Lee and Mr Chee co-lead a workstream under Sert that will focus on longer-term strategies to help businesses and workers to seize new opportunities and build resilience in the evolving economic landscape.
Deputy Prime Minister and Minister for Trade and Industry Gan Kim Yong said that the bulk of Singapore’s economy is not driven by domestic demand, but by external demand from the rest of the world, including the US and China.
When the global economy slows down because of tariffs, domestic demand will come down, making businesses more cautious. This, in turn, could lead them to hold back their plans for expansion, purchases and hiring.
“This is not just in Singapore. It’s global,” Mr Gan said.
For an open and small economy like Singapore, a 10 per cent tariff imposition will have larger ramifications.
This is because Singapore exports a lot of its goods and services to countries that then export to the US. If these countries are hit by the tariffs, they may also reduce their demand for Singapore’s products.
“So, there are direct impacts from the 10 per cent baseline tariff, but there’s also an indirect impact on exporting countries,” he said.
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Given the uncertainties, the Singapore Government has set up Sert to monitor and make sense of developments and share this information to help businesses and workers, so that they can adapt to the new environment.
The task force, chaired by Mr Gan, also aims to help businesses and workers boost their resilience and adapt to the new economic environment.
While Singapore is subject to the minimum 10 per cent tariff on all exports to the US, among the lowest levels in South-east Asia, analysts warn that the real damage may come when nations retaliate.
That has already started to happen, with China slapping a 125 per cent tariff on US goods into the mainland in retaliation to the 145 per cent tariff the US has imposed on Chinese goods entering America.
The Ministry of Trade and Industry on April 14 downgraded its 2025 growth forecast for Singapore to zero per cent to 2 per cent, from 1 per cent to 3 per cent previously.
Minister for Manpower and Second Minister for Trade and Industry Tan See Leng identified five export-oriented sectors that are potentially affected by the new US tariffs. They are manufacturing for exports; finance and insurance; wholesale trade; transport and logistics; as well as the semiconductor, biomedical and pharmaceutical sectors.
“Trade is three times our gross domestic product. There are many of these half-finished products that come through here. We finish the final packaging... the impact would be significantly higher,” he said of the 10 per cent tariff the US has imposed on Singapore.
Mr Tan said the Government’s support measures will be more targeted to ensure businesses continue to support the employment of workers.
He added that given the uncertainty, the Government does not want to expend its dry powder with all sorts of schemes, but rather direct the dry powder to where it is needed.
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TariffsSingapore economyTrade warUS-China trade war
