PUBLISHED ONApril 15, 2025 7:30 AMByBhavya RawatThe recent US-imposed tariffs have caused an unstable external environment, which has led to unprecedented uncertainty for Singapore, according to Senior Minister Lee Hsien Loong.
On Monday (April 14), SM Lee addressed the tariffs' impact on Singapore and stated that uncertainty is high, and over the next five to 10 years Singapore faces "a less friendly world".
He was speaking at a closed-door dialogue at the National Trades Union Congress (NTUC) Centre, which was attended by NTUC president K Thanaletchimi, secretary-general Ng Chee Meng as well as other union leaders.
SM Lee acknowledged that such dialogues with union leaders were held regularly, particularly after Budget announcements.
As he continued speaking about the tariffs, he said: "I hope that Singaporeans understand what is happening, what is at stake, and what we must do together to secure our future."
"Some people say, 'don't get excited, don't over blow the issue, we've weathered bigger storms before, we haven't failed'.
"We should take it in our own stride, but we do need to be concerned and to understand what is happening and what this means for us, because this time, something important is different."
While acknowledging Singapore's ability to "batten down (the) hatches and see it through" during events such as the Asian financial crisis, Sars (severe acute respiratory syndrome) and the Covid-19 pandemic, SM Lee explained that this had been possible due to the country's ability to unite during turmoil and a working global economic system that promoted the free flow of trade and a "level playing field" for big and small countries alike.
This was because of the Most Favoured Nation (MFN) rule, where tariffs and concessions on one trading partner apply for every other country.
This gave small countries, like Singapore, with very little bargaining power the same market access which big countries enjoy, said SM Lee.
"The free flow of investments encouraged MNCs (multinational corporations) to look for places to do business. We were efficient, we were doing well. We came out from trouble. We plugged back in. We could resume growing, resume developing, resume succeeding."
But the US, with its new tariff regime, now wants to "dismantle the system" by replacing the MFN principle with reciprocal tariffs.
The flat duty of 10 per cent placed by US on foreign goods arriving in the US, which took effect on April 5, still applies to Singapore.
Comparing the current situation to arm wrestling, SM Lee said this new regime involves the US "dealing with its partners one-on-one instead" and exploiting its bargaining power as the country with a quarter of the world's gross domestic product, and a seventh of the total goods trade in the world.
"So, it's a fundamentally different kind of world which the US is looking for and pushing for, and the approach is not win-win, but win-lose," he explained.
"In other words, the US wants to do well for themselves, (and) they really don't mind whether the other countries do well for themselves or not."
SM Lee also outlined the implications of these tariffs for Singapore and the world.
"Small countries will suffer because we have no bargaining power, but even big countries will not do well because there is going to be a lot of confusion, a lot of uncertainties, a lot of differences in the rules, and far fewer opportunities to trade, to invest, to do business together," he said.
Tariffs "will choke off trade, raise costs and dampen growth" despite the 90-day pause on their coming into effect as other countries will go tit-for-tat with the US, similar to China.
This, in turn, will be a burden on businesses, consumers and the global economy.
SM Lee also warned that this is a problem that will persist in the long run.
"With all these new tariffs, this is something which is going to last a very long time. It's not going to go away soon, because once you put in a tariff, once you protect your market, it's very difficult to take it away," he said.
The Ministry of Trade and Industry has downgraded Singapore's economic growth forecast for 2025 to zero to two per cent, citing the current US-China tariff war as a major risk to growth.
Prime Minister Lawrence Wong announced on April 8 that a task force will be formed to address economic uncertainties, including any impact on jobs, due to the tariffs being imposed.
The task force — chaired by Deputy Prime Minister Gan Kim Yong and comprising representatives from NTUC, the Singapore Business Federation and the Singapore National Employers Federation — will communicate with the private sector and devise strategies.
SM Lee also said in his speech that he did not think there would be a recession, but it "could happen".
"We must expect lower growth this year and recession somewhere down the road, maybe not this year, but quite possibly at some point," he said, as he reiterated the different landscape in which Singapore now must operate.
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