Singapore anticipates limited impact from U.S. tariffs, warns of long-term effects

Singapore's Deputy Prime Minister Gan Kim Yong addressed concerns about the impact of U.S. tariffs on the nation's economy in an interview on February 19, 2025. He indicated that Singapore is unlikely to experience significant direct effects from these tariffs, primarily because the country maintains a trade deficit with the United States. In 2024, the U.S. had a substantial trade surplus with Singapore, amounting to $2.8 billion. This trade relationship largely insulates Singapore from immediate disruption resulting from tariff impositions. However, while Gan acknowledged the limited direct impact, he cautioned against underestimating the long-term consequences of tariffs. He explained that shifts in global supply chains could lead companies to relocate their production bases, potentially increasing friction and costs within the global economy. Such changes could ripple through various sectors, affecting trade patterns and overall economic growth trajectories not just in Singapore but internationally. It reflects a broader concern among trade-dependent nations about the evolving dynamics in global commerce due to trade barriers. In addition to discussing tariffs, Gan highlighted the government’s focus on energy sustainability and technological advancements. Singapore is evaluating the potential for small modular reactors (SMRs) as it reassesses its energy strategy. Following a previous evaluation in 2010 that dismissed conventional nuclear energy as unsuitable for the island nation, the government is now reexamining nuclear options, factoring in the safety and technological maturity of SMRs. Gan's remarks came shortly after Singapore Prime Minister Lawrence Wong announced the budget for the 2025 fiscal year, which includes measures aimed at alleviating cost-of-living issues for households and promoting local business development. With a trade-to-GDP ratio exceeding 300%, Singapore is acutely aware of the importance of maintaining robust international trade ties. The ongoing volatility in global trade due to tariffs and other barriers could have lasting repercussions, emphasizing the need for Singapore to be proactive and adaptable in response to these challenges.