Debated in Parliament on 8 Apr 2025.
Mr Speaker, we have known for some time that the world is in flux. The familiar signposts are fading, but the contours of a new global system have yet to take shape. We are in a period of transition – uncertain, unsettled and increasingly unstable.
The recent "Liberation Day" tariff announcements by the United States (US) confirms this stark reality – the era of rules-based globalisation and free trade is over.
This marks a profound turning point. We are entering a new phase in global affairs – one that is more arbitrary, protectionist and dangerous.
For nearly 80 years since the end of World War II, America was the anchor for the free market economies of the world. It championed free trade and open markets, and led efforts to build a multilateral trading system. This World Trade Organization (WTO) system ushered in decades of global growth and stability. It allowed trade to flourish and lifted millions out of poverty. It benefited the world and contributed to America's own economic strength.
Objectively, America continues to enjoy unrivalled economic heft. In fact, the US rebounded more quickly than other advanced economies from the COVID-19 pandemic. It has surged ahead of all its major competitors in the advanced industrial world.
But not all Americans feel this way about their economy. There are hollowed-out towns in what was once America's thriving industrial belt. There are workers whose jobs have disappeared and whose incomes have stagnated. They believe that the American economy is fundamentally broken.
Discontent was already visible in the 1990s when protestors disrupted the WTO meeting in Seattle. Frustrations deepened following the Global Financial Crisis of 2008 and more recently, after the COVID-19 pandemic.
To be clear, the global economic system is in need of reform. Singapore and many others have called for changes, and we have been working with like-minded partners at the WTO to reform its processes.
A key concern in America is China – the sense that the US had given away too much in allowing China to join the WTO and that China competes on an unfair basis, for example, by heavily subsidising its own companies, putting up non-tariff barriers and restricting market access to US firms.
These concerns should be addressed within the WTO framework. In particular, the trade arrangements and concessions made in the past when China was only 5% of the world's economy should be updated when China now makes up 15% of the world's gross domestic product (GDP). And if there are disagreements, they should be resolved through the WTO's dispute settlement system, which has been paralysed and urgently needs to be restored and reformed.
But what the US is doing now is not reform. It is rejecting the very system it created.
The US has imposed a blanket 10% tariff on imports for nearly all countries. On top of that, it has layered on higher tariffs, up to 50%, for selected countries, especially those that run a trade surplus with the US. According to the administration, the sweeping tariffs are needed to fix America's trade imbalances.
But there is nothing inherently wrong about running a trade deficit. It simply means that American consumers are buying more from the world than the world is buying from America. Moreover, the focus has been solely on the goods trade. That only gives a partial picture. In fact, the US runs a surplus with many of its trading partners in services, exporting software services, education, entertainment, financial and business services. But this fact has been completely ignored.
In Singapore's case, we have a free trade agreement (FTA) with America. We impose zero tariffs on US imports and we actually run a trade deficit with the US – meaning we buy more from them than they do from us. If the tariffs were truly reciprocal and if they were meant to target only those with trade surpluses, then the tariff for Singapore should be zero. But still, we are being subjected to the 10% tariff. We are very disappointed by the US move, especially considering the deep and long-standing friendship between our two countries. These are not actions one does to a friend.
Asia bears the brunt of the US tariff increase. Within the region, China is the hardest hit, facing a 34% tariff in this round. This is on top of the 20% tariff increase imposed over the past two months and the 20% from the first Trump administration. Taken together, the average US tariff on Chinese products now exceeds 60%.
In Southeast Asia, the tariff rates range from 10% to 49%.
These measures will accelerate the fracturing of the global economy. Instead of flowing based on economic efficiency, capital and trade will increasingly be diverted based on political alignment and security considerations.
Several Members have asked about the impact of the tariffs on specific industries in Singapore. We are assessing the situation carefully. But our deeper worry is not the direct impact that these businesses face. It is the wider implications for the global trading system and the world economy. Let me explain.
First, the "reciprocal" tariffs are a fundamental rejection of the WTO rules. One of the cornerstones of the WTO multilateral trading system is the Most Favoured Nation (MFN) principle. Most Favoured Nation sounds like giving special privileges. Actually, it means the opposite – that every member must treat all other members equally. In other words, if a country extends more favourable terms or imposes additional restrictions to one trading partner, it must do the same to all other WTO members.
There are some carve-outs and exceptions to the MFN rule, for example, to allow FTAs. But MFN has long been the bedrock of the multilateral trading system. It ensures a level playing field, prevents discrimination and enables countries, big and small, to compete fairly in global markets.
This has helped to liberalise trade amongst more than 100 WTO members, each with different economic and political and social concerns.
America's new tariff regime is a complete repudiation of the MFN principle. It opens the door to selective country-by-country trade relationships, based on unilateral preferences.
If other countries adopt the same approach as the US, the rules-based trading system will unravel. This will spell trouble for all nations. But smaller countries, like Singapore, will face more pressures because small countries have very limited bargaining power in one-on-one bilateral negotiations. So, the major powers will dictate the terms and we risk being marginalised and sidelined.
Second, the likelihood of a full-blown global trade war is growing. Singapore has decided not to impose retaliatory tariffs. Doing so will only lead to increased costs for Singaporeans. But other countries may not be guided by the same considerations and may have different perceptions and views.
China has already imposed retaliatory tariffs on US goods. Others, like the European Union, are considering their next steps.
Some think that the new tariffs are a negotiating tactic, a negotiating tool by the US to extract concessions in other areas. This was what President Richard Nixon did in 1971. He slapped a 10% surcharge on imports to pressure Germany and Japan to devalue their currencies and when they did, the tariffs came off.
Indeed, there is a brief window for countries to negotiate and get some reprieve from the US before their higher tariff rates take effect and it may be possible for some rates to be lowered. But we have to be realistic. Once trade barriers go up, they tend to stay up. Rolling them back is much harder, even after the original rationale no longer applies.
Even if some partial accommodations are eventually worked out, the uncertainty generated by such a drastic move will dampen global confidence and growth. It will be very hard to restore the previous status quo. And in particular, it does not look like the 10% universal rate is open for negotiation. This seems to be the fixed minimum tariff, regardless of a country's trade balance or existing trade arrangements.
Furthermore, there are other forces that could maintain the momentum for tariffs. In particular, many European countries are eager to protect their critical industries, like electric vehicles (EVs), green technologies and semi-conductors, from Chinese competition. They do not want to become a dumping ground for exports from China or other countries.
There is also a growing push across the West to strengthen their domestic manufacturing capabilities and to reduce dependence on global supply chains, especially in strategic industries.
So, this round of tariff increases by the US may just be the beginning of more increases to come globally. And we have seen this play out before. The US enacted sweeping tariff increases through the Smoot-Hawley Act in 1930. Many countries protested and a number retaliated with their own trade restrictions and tariffs. This deepened and extended the Great Depression.
In some ways, today's risks may be greater. The new US tariffs, if fully enacted, are higher than the ones in Smoot-Hawley. Trade is now a much bigger part of the American and global economy compared to the 1930s. Supply chains are also more deeply interconnected than they were back then. Any disruption to trade flows will have wider knock-on effects on the world.
This brings me to the third point, which is the impact on the global economy.
Business and consumer confidence has already been hit by the tariffs. International trade and investments will suffer. Our economic agencies got in touch with several multinational enterprises (MNEs) and local businesses after the tariff announcement. Even those who are not directly affected by the tariffs are worried about weakening demand from their consumers. Some have put new projects on hold while they assess the full implications of the tariffs.
These are reactions from companies based here. But I am sure similar conversations are happening in board rooms elsewhere.
Over the recent days, we have seen sharp negative reactions in global stock markets. It is too early to tell is all these will spill over into the real economy. But the downside risks are clearly rising. What is troubling is not just the tariffs themselves, which are already damaging, but the fact that this new wave of protectionism is unpredictable and unstable. Protectionism is already bad. Unstable protectionism is even worse.
Businesses do not know what to expect. Many are holding back, fearful that changing rules will leave them with stranded assets. And all these create an environment of deep uncertainty, one that could tip both the US and the global economy into recession.
The consequences extend far beyond economics. More and more countries are turning away from win-win cooperation and deeper integration. Instead, we see a rising "me first", win-lose mindset, where it is every country for itself. Some are even prepared to use aggressive or coercive means to get what they want at the expense of others.
Meanwhile, global institutions are getting weaker and long-standing norms of cooperation are breaking down.
One major concern is the US-China relationship. America views China as a strategic competitor and threat, which must be dealt with now while America still has the advantage. China says it is ready for a tariff war, a trade war or any other type of war. The US has now threatened an additional 50% tariff on China and China says it will fight till the end. There are fewer channels for dialogue, which can serve as guardrails to manage the relationship. So, if the disputes escalate and destabilise US-China relations, the consequences for the world would be disastrous.
We must be mentally prepared. The predictable and rules-based order we once knew is fading. The new era will be more volatile, with more frequent and unpredictable shocks. We must be ready to stand firm and protect our interests, no matter how the external winds may blow.
What does all this mean for Singapore?
In the near term, we expect weaker global growth, which means external demand for our goods and services will fall. The outward-oriented sectors of our economy will suffer the brunt of the impact. They include, manufacturing, especially segments like electronic and semi-conductors; biomedical science, which have higher exposure to the US; wholesale trade; and transport – these will be impacted. The global uncertainty and dampened sentiments will also impact some services industries, including finance and insurance.
Singapore may or may not go into recession this year. But I have no doubt that our growth will be significantly impacted. We had originally projected GDP growth of 1% to 3% for 2025. The Ministry of Trade and Industry (MTI) is reassessing the growth forecast and will likely revise it downwards.
Slower growth will mean fewer job opportunities and smaller wage increases for workers. And if more companies face difficulties or relocate their operations back to the US, there will be higher retrenchments and job losses.
For now, the measures announced in this year's Budget will provide support for any short-term strain. We have a comprehensive package of measures for households and individuals. They will receive the Community Development Council (CDC) Vouchers, SG60 Vouchers and U-Save rebates to help with their cost of living. And there are also targeted measures, like increased ComCare Assistance, for the more vulnerable groups.
We are also supporting workers through investments in SkillsFuture. And those who find themselves involuntarily unemployed will receive help to get back on their feet through the SkillsFuture Jobseeker Support scheme which will start later this month.
We have also rolled out various measures in the Budget to help businesses. There are short-term support measures through corporate income tax rebates, as well as schemes to boost their productivity and competitiveness, and to pivot 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.
Nevertheless, the situation is fluid and can change quickly. We will, therefore, set up a task force chaired by Deputy Prime Minister Gan Kim Yong to help businesses and workers address the immediate uncertainties, strengthen their resilience and better adapt to the new economic environment. In addition to our economic agencies, the task force will include the Singapore Business Federation, the Singapore National Employers Federation and the National Trades Union Congress (NTUC).
We will continue to monitor developments closely. The Government stands ready to do more, if and when necessary. We have the resources to do so because of the financial discipline and prudence we have exercised over the decades.
In this new environment, Singapore must redouble our efforts to remain a key node in global flows and a trusted business hub. We will forge closer ties with like-minded partners who share our commitment to open and free trade.
The US may have decided to turn protectionist, but the rest of the world does not have to follow the same path. We will identify other partners to join us and work around this, to ensure resilience and maintain critical parts of the multilateral system, while laying the foundations for a possible new and different global system that can be achievable later.
And this is why I have made the effort to engage and visit my counterparts in different countries. I touched base with the United Kingdom's Prime Minister Keir Starmer yesterday and have a few more conversations lined up in the coming weeks. They are all keen to do more with Singapore and to expand our economic cooperation, including in new areas in the digital and green economies.
In particular, we will strengthen our collaboration and integration within the Association of Southeast Asian Nations (ASEAN). Last Friday, I spoke with the Malaysian Prime Minister Anwar Ibrahim. Malaysia is also the ASEAN Chair this year. We agreed to accelerate ASEAN's integration efforts to make our region more attractive and competitive.
A Special ASEAN Economic Ministers' Meeting will be convened later this week. They will discuss further ways that ASEAN can work together to strengthen intra-ASEAN Trade and to send a strong signal of ASEAN's commitment to regional economic integration. As a group, ASEAN will also continue to strengthen our links with like-minded partners in areas of mutual interest.
Mr Speaker, we are entering a changed world. The only way Singapore can make it through the gathering storm is to stay united, pool our resources, our resilience and our resolve.
The Government will do everything we can to steer Singapore through the choppy waters and make sure no one is left behind. We will keep our economy open, our society cohesive and our institutions strong. We will create new value propositions for businesses and investors. We will act boldly and decisively, when needed, to ensure Singapore continues to succeed.
Above all, we will put the interests of Singapore and Singaporeans at the centre of everything we do. The road ahead will be harder. The dangers are real, but so, too, is our determination.
In many ways, we are in a better position than we were 60 years ago when we became independent. We have built deep reserves as a strategic buffer. We have forged a strong compact, built on solidarity and trust in each other. And most of all, we have our ingenuity and wit, our grit and gumption – a never say die spirit that has seen us through every crisis, and will carry us through the ones to come.
So, Mr Speaker, I say to this House and to fellow Singaporeans: do not fear. Now, more than ever, we will stay resolute and united. Our little red dot will continue to shine. In a dark and troubled world, Singapore will hold our ground as a beacon of stability, purpose and hope. [Applause.]
Leader of the Opposition, Mr Pritam Singh.
Mr Speaker, I thank the Prime Minister for his Ministerial Statement, which expands on the video message that he shared with Singaporeans on 4 April 2025. I refer to that video message and the Prime Minister's Statement today that referenced vigilance and building up capabilities.
Even though I accept it is early days and there are a lot of moving parts at the moment and how world economies are assessing their own positions and pivoting to a new reality, there have been references to de-risking and decoupling that have been in the global economy lexicon for some years now. I would be grateful if the Prime Minister could share, when he refers to building up capabilities, is the Prime Minister looking at improving local consumption, notwithstanding our small market, and measures to boost productivity?
Earlier on during Parliamentary Questions, the Senior Minister of State for Manpower suggested that companies should reduce their reliance on cheap foreign labour, do we foresee major structural changes in the way the Singapore economy is shaped, to deal with the new future that we see, which, in the Prime Minister's words, is far more unpredictable than before?
Secondly, the Prime Minister spoke of a task force. I think similar announcements have been made by the Malaysian government. I would like to confirm whether there is going to be a period of time before the Prime Minister makes more announcements, with regard to exchanges that he has had with stakeholders in both the private and public sectors so that Singaporeans can better understand the way forward, and which industries will be more affected.
Sir, we are certainly going to be taking steps to build capabilities. It is an ongoing endeavour and in this year's Budget, we set aside more resources to doing so, especially to strengthen our economy, to build up our capabilities in innovation and new technologies, which are the key drivers for any economy to be strong, dynamic and vibrant.
At the same time, we are building capabilities in our people, investing in human capital, investing in our workers, upgrading the skills of our workers through SkillsFuture, and we are putting significant resources into this effort to make SkillsFuture a key part and a key pillar in our social compact. So, the capability-building efforts will continue, in fact, we will redouble our efforts in this area. And the key reason why we are able to do all this is precisely because we have the fiscal resources to set aside. It is because we have, over many decades, exercised discipline and prudence in managing our resources, and that is why in these difficult times we are able to put in place the resources to build up the necessary capabilities to see us through the storms ahead.
On the task force, I may also ask Deputy Prime Minister Gan Kim Yong to say a little bit more later. But certainly, we are going to engage industries. We will continue the review and the monitoring of the global situation and if there is a need, we will provide further updates to Singaporeans as and when we are ready, and as and when there is a need to. Perhaps the Deputy Prime Minister Gan can elaborate.
With your permission, Mr Speaker, I just want to respond that this task force has just been announced. We are still working out the detailed composition as well as the tasks forward. But one of the key focus of the task force is going to be in terms of communication and information sharing.
We will be engaging the private sector, so that is why the Prime Minister announced that the composition will include private sector representatives. The idea is to gather information from the ground, understand the challenges that are faced by the enterprises on the ground and to also discuss with them how we can lean forward to support them, to help them navigate through these uncharted waters as we move ahead under this new landscape.
We also will include union representatives, because we do expect that jobs may be affected. It may not be immediately, but I think, in the medium to longer term. I think there will be a major restructure of the economy that will result in the restructure of the workforce as well. And I think, as the Prime Minister emphasised, the focus on training is always the key to our transformation journey and therefore, unions and employers and enterprises will play a key role.
As I said many times before, our main guiding principle is really to be as transparent as possible. When we know something important, we will share with the population, with the businesses, with the workers, with the unions and with Members. And when we do not know it yet, we will tell you, honestly, that we do not have the information yet. So, I think, this is still the early days, as the Leader of the Opposition has also acknowledged. It will take time for us to get to a better understanding, better assessment of the total impact of what is going to happen.
Also, we have to bear in mind that what would happen also has to take into account the reaction from the countries other than America, so their reaction will also add on to the potential impact on the tariffs and on Singapore's economy, and at the same time, we are also reaching out to our trading partners to share our information, share our assessment of the situation, to see how we can find different ways of working together, to continue to do business with one another, to continue to provide opportunities for businesses and for our enterprises.
Before we proceed, I would just like to take this opportunity to remind Members that pursuant to Standing Order 23, Members may seek clarifications on the Ministerial Statement, but no debate should be allowed thereon. Members can certainly seek clarifications by way of asking questions, so I seek Members' understanding to keep your clarifications clear and concise. Mr Liang Eng Hwa.
Sir, while we are disappointed with the imposition of the 10% tariffs by the US, the US remains our key relations that go beyond the economic space, but into defence and others. So, can I ask the Prime Minister whether we continue to have access to the key administration officials in the US to negotiate on tariffs? And where can we land with these discussions, these negotiations? And also, whether the other initiatives that we are working on, for example, in the military, in the energy space, are these going to be affected by this increase in the tariffs?
The second question to the Prime Minister is, if we, indeed, do trade less with the US because of the tariffs, can I ask where else, and what other markets and corridors can we go to make up for it? For example, in the other groupings like the Regional Comprehensive Economic Partnership (RCEP), Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), ASEAN and so on, and the European Union, are there new corridors, new markets where we can develop more trade relations?
Sir, we will actively engage members of the US administration to better understand their concerns about our trade relationship, to see if we can address any misperceptions about our bilateral trade with them, and then to discuss what is the best way forward. Of course, if the US decides that the baseline rate is universal across all countries, then it is a different consideration altogether, it is not bilateral. It is their view of the world and they have decided that every country should at least have a 10% tariff. But we are continuing to have these conversations with the US administration and also with other countries.
On the other aspects of our overall relationship with America, they continue to be important. We value the relationship. We believe the US values it too. In areas, like security and defence, we have such a close relationship built up over many decades and we will continue to maintain that; and we will also discuss cooperation in new areas, like critical new technologies, as well as energy. So, these areas of cooperation remain and we certainly want to continue advancing them as well.
On where else will there be new markets for our exports, well, we will continue to find export markets. We will help our companies identify new markets, including areas that they may not be so familiar with, and that is why we are redoubling our efforts to strengthen our links, including in areas in the Middle East, in Latin America, areas where we may not have such close links, but we think there is potential and opportunities to do more.
But fundamentally, we have to be prepared that if trade barriers around the world are higher than they were before, then, ultimately, we are entering a world where there will be slower growth, less demand for our goods and services. So, structurally, we are in for a more difficult ride, not to mention that if economic activities are going to be configured in a way that is not so much based on efficiency, but security, geopolitical and political considerations, then cost will be higher and at the end of the day, the world ends up operating on a higher cost base. So, these are the harsh realities that we have to be prepared for.
Mr Yip Hon Weng.
Mr Speaker, I thank the Prime Minister for his Statement. I have two clarifications. Given that many local businesses operate within global supply chains, how will the anticipated pass-through effect of increased cost to Singapore consumers look like? And two, for small and medium enterprises (SMEs) that lack the skill to absorb the sudden cost increase, what tailored support is the Ministry considering to ensure that it will remain competitive and can continue to meet consumer demand without raising prices significantly? I assume this is something that Deputy Prime Minister Gan's task force will look into.
Sir, in the near term, if global demand slows down, it may actually mean less inflationary pressures, because global demand is coming off. It is the reason why you see oil prices coming off in the near term. But as I mentioned just now in my response to Mr Liang Eng Hwa, overall, if the entire global economy is going to be configured on a less efficient basis, it must mean higher cost; and this will impact Singaporeans as well, so we are watching for that and we will continue to monitor that closely.
The impact on Singaporeans, the impact on business and as the Member Mr Yip said, what additional measures may be needed. For now, we think that the Budget measures are adequate, but the task force chaired by Deputy Prime Minister Gan will monitor, will assess and will put up recommendations when ready.
Assoc Prof Jamus Lim.
Sir, just a few questions. The first is on international trade and the other is on domestic economic policy.
For trade, I wonder if the Government will be looking to negotiate within the broader rubric of ASEAN or the CPTPP as a block? I understand that this may mean greater difficulty in arriving at a consensus position, especially with harder hit economies like Vietnam, potentially lowering the common denominator, but at the same time, it greatly strengthens our bargaining position as an economic entity. ASEAN, for example, is the world's fifth largest economy.
For the domestic economy, beyond the existing slate of vouchers, I wonder what other policies the Government will be considering in order to shore up consumer demand and to help rebalance the economy toward domestically-driven demand, at least in the short run. I understand that our small domestic market will never be sufficient alone as a driver of growth, but some short-run stabilisation, I feel, may be valuable.
And then, finally, has the Minister also considered the possibility of anti-dumping procedures that may be enacted if, indeed, nations with surpluses choose to export at low prices to Singapore?
Prime Minister. Or Deputy Prime Minister Gan?
Thank you, Speaker. First, on external trade relationships, indeed, we are working with ASEAN members as well as our fellow CPTPP partners, as well as other trade organisations, to see how we can come together to discuss our strategy towards the US, how we can negotiate and discuss as an organisation.
We announced that we are going to have the ASEAN Economic Ministers Meeting shortly, if I am not wrong, on 10 April. And subsequently, we can then share with Members what is the outcome of the discussion. The idea is to come together to share our information, our assessment of the situation and to explore ways that we can work together moving forward, including discussions with the US, as well as how to further strengthen and deepen regional integration, which will be helpful to our economies as well.
In terms of domestic demand, I should just sound a word of caution that if we are over-stimulating demand, we will end up with inflationary pressures. So, it is something that we have to always be careful about. We need to strike a balance. And as Assoc Prof Lim pointed out, we have a very small economy. It will not be able to move the needle.
In terms of anti-dumping duties, it is a possibility provided under the WTO. But you also have to bear in mind that by imposing anti-dumping duties, that means consumers in Singapore will be paying the duty for the imports and that will add cost to Singaporeans. So, I think, we just have to bear that in mind. Usually, anti-dumping duties are introduced in order to protect local, domestic industries that are facing the onslaught of imported products at very low prices, and this is to balance the trade between imports and our local production. But if our industries are competitive and in fact, they are mostly export-oriented; therefore, I think we have to be very careful in considering introducing anti-dumping duties.
Mr Desmond Choo.
Mr Speaker, I would like to thank Prime Minister for his Ministerial Statement. The Labour Movement has surveyed our unionists. They are rightly worried about growth issues, loss of jobs and cost of living, but they have also expressed confidence that the People's Action Party Government will stay us through these difficult times.
I would like to ask the Prime Minister how should the tripartite partners conduct themselves during this period of time to prepare themselves in both the short and medium term for impact that will certainly hit them in terms of jobs, lower wage growth and in fact, some of them might lose their jobs. How can we continue to prevent anti-foreigner sentiments from setting in, especially during such times?
Sir, we do so best by upholding that strong base of trust, mutual trust and understanding that we have developed over so many decades amongst our tripartite partners – working closely together, engaging one another, being upfront with the concerns we all share and addressing the problems together.
So, in the near term, whatever issues there are, whatever information the Government has, we will share with the unions, with the businesses, with workers through the task force and other mechanisms. If there are specific concerns, we will try our best to deal with them. And if we feel that the Budget measures we have or existing measures are not adequate, we will certainly be ready to introduce new measures.
I think it is that spirit of working together which has enabled us to overcome previous crises and it will enable us to get through the current difficulties as well.
Mr Mark Lee1,2, I know you had filed Parliamentary Questions on this. You have the floor.
Thank you. The Prime Minister has rightly pointed out that global conditions are turning increasingly uncertain and many businesses are now bracing for a downturn. I just want to highlight three key concerns that have surfaced in recent engagements before my supplementary question.
The first is that there is a clear anticipation of a drop in global demand. Some US-based consumer brands are already advising their supply chain partners to prepare for a mid-term volume reduction of up to 30%. Long term, no one knows for certain; and this will have a ripple effect on Singapore-based companies. Second, Singapore businesses are facing margin erosion, especially with clients requesting their supply chain partners to absorb part of the cost shock from the new tariffs because these tariffs are too large to pass through via pricing adjustments in the short term. This will hit cash flow for our businesses. And third, Singapore firms have adopted a "China plus one" strategy investing in Vietnam, Cambodia and Indonesia but now, they are even hit with tariffs higher than the baseline of 10%. So, these companies are now under renewed pressure to diversify further, adding another base to stay competitive and it is costly and complex.
I hope Deputy Prime Minister Gan's task force will be looking at the near-term support and would like to clarify if this support will include measures to help Singapore companies in cash flow, relocating or reshoring their supply chains, as well as taking a longer-term view to seize new opportunities arising from these global supply chain shifts.
Sir, I thank Mr Mark Lee for sharing the very real and genuine concerns amongst businesses. We have heard similar feedback amongst our businesses. It is not just businesses based in Singapore who are impacted because, as Mr Lee says, some businesses have diversified, expanded and built factories in places like Vietnam, China, and now they are hit with even higher tariffs. And so, it will have impact on their operations and in the end, all this will spill over and impact growth this year and also our prospects for future growth.
That is why we are concerned. That is why we think the concerns have to be dealt with quickly. And so, Deputy Prime Minister Gan's task force will continue to engage businesses to better understand the full extent of the impact, because this situation is still unfolding; and eventually, to work out what additional measures we need.
Ms Hazel Poa, earlier on, you had raised your hand. No? I wanted to call on Members who had raised their hands earlier. But if it is no longer the case, Mr Saktiandi Supaat.
Mr Speaker, I would like to thank the Prime Minister for sharing his thoughts and highlighting to us about the setting up the task group. I have got three clarifications, Mr Speaker.
One is whether the Prime Minister can share with us a bit more about his negotiations within ASEAN, because the Prime Minister mentioned that he had a chat with the Prime Minister of Malaysia, and how the ASEAN negotiations would go ahead in terms of dispute resolution or in terms of the trade tariffs that have been introduced.
Second, I know the situation is still fluid, but there are concerns about the semi-conductor tariffs that might come onstream. Given that Singapore is a re-export hub, semi-conductor is a significant proportion of our manufacturing sector, can the Prime Minister or Deputy Prime Minister Gan share, on a sectoral basis, the impact of the semi-conductor tariffs, if they do come in, its impact on jobs and GDP in Singapore?
And the last clarification is whether the Prime Minister or Deputy Prime Minister Gan can share, at the interim and at the start, whether there has been macro counterfactual simulations of existing tariffs that have been introduced and whether if there is an addition of 5% or 10% tariffs or semi-conductor tariffs, the impact on growth and jobs for Singapore?
I think I will give the Member a very broad assessment of the impacts, as I mentioned earlier. I think we still need to look at what the US is going to do with regard to semi-conductors. It is indeed something that is of great concern to us. We have been engaging the semi-conductor companies and to discuss with them what we can do to help them to make sure that they are able to manage the impact of the import duties.
Our semi-conductor exports to the US comprises about 8.9% of Singapore's total goods exports to the US and this is equivalent to 0.8% of Singapore's total goods exports to the world in 2024. So, it is not insignificant. It is something that we will continue to have to work with them and see how we can manage the potential impact of duties on Singapore's exports to the US.
On the first question about negotiations and whether we are going to do this bilaterally or collectively as ASEAN, I think the ASEAN member states, each one of us, bilaterally will already engage America – we will certainly do so and I am sure other countries are doing so as well. The Member would have read that about that in the media.
As for what position ASEAN takes as a whole, the ASEAN Economic Ministers are meeting soon and they will discuss further. But one key step that we can take, quite aside from engaging America as a collective, is really to redouble our efforts, work even harder to reduce non-tariff barriers within ASEAN itself. ASEAN's tariffs are already largely removed, but to reduce further non-tariff barriers, to facilitate better trade within ASEAN and to ensure that ASEAN remains even more attractive and competitive, I think those are actions that we certainly want to do.
Mr Leong Man Wai.
Mr Speaker, the Progress Singapore Party welcomes the Prime Minister's reassuring message to Singaporeans just now: "do not fear".
I have four clarifications. As a nation, we have a good track record of overcoming challenges like the oil crisis, the Asian Financial Crisis, SARS and COVID-19. We can do it again. The tariffs are game-changing, but we do not know 100% the long-term economic impact on Singapore at this moment.
First question, as Singapore has the lowest 10% tariff in Asia, does the Government not believe that this will put us in a stronger competitive position to continue exporting to the US?
Second clarification, what are the chances that these tariffs will be temporary, perhaps not more than two years?
Three, does the Prime Minister believe that the world has been adjusting to a post-Pax Americana era for a while, and this move by the Trump Administration will only accelerate this process and the world may arrive at a new equilibrium sooner?
Fourth and last clarification, Singapore is now a far larger economy and diverse society than before. Does the Prime Minister agree that the right approach to dealing with adversity is to have free contestation of ideas and not group think?
Mr Speaker, certainly, we welcome all ideas. We have said it repeatedly. And the Government will continue to engage all stakeholders to build a better future for everyone in Singapore.
On the questions that Mr Leong raised, in fact, some of them were already addressed in my speech. I did say that today's order is eroding and a new order is coming in place. And indeed, America's actions may accelerate this move. But we are in a period of transition, one that is uncertain, unsettled and increasingly unstable. Transitions are always unstable until you eventually find a new equilibrium – and we have no idea what that new equilibrium will be or when we will get there.
Will the tariffs be up temporarily? I also mentioned this in my speech just now. There are some hopes that the negotiations may bring down the higher tariffs. But I think we have to be realistic, not sure that this can be done. And when tariffs are raised, it is usually, as you look at the historical record, very hard for them to come back down again. And in any case, the administration has already indicated the base tier is not for negotiation. For now, that is their position. We are engaging them, but if that is truly their position, then these are not temporary tariffs at all. We are not going back to the previous status quo. We are in a new phase with higher trade barriers.
Should we take comfort that we are in the lowest tier? Well, I suppose if you want to see silver linings in dark clouds, you can say so. But certainly, for us as a country, so reliant on trade for our growth, on external markets for our living, this new environment will be detrimental to Singapore's longer-term prospects. So, I take no comfort at all in us being in the lowest tier and I think that we have to brace ourselves for a much bumpier ride ahead.
Mr Neil Parekh.
I thank the Prime Minister for his video, his comments today as well as Deputy Prime Minister Gan for many of the details he provided about what we plan to do in the future.
The current US administration seems to have shown themselves to be fairly open to bilateral negotiations and in fact, has encouraged bilateral negotiations. For small countries like ourselves, it is obviously a lot harder to negotiate because the negotiation is not done on the basis of any straight international law but more of the laws of the jungle, which is, what can you do for me today?
From a perception standpoint, certainly, in the US and perceptions shared by many senior folks in the current administration, Singapore is seen as a rich country with significant, not natural but financial resources, especially in the three sovereign wealth funds, or two plus one, our sovereign wealth system.
I fully appreciate this is a hypothetical question, but the view is, if down the road, in a negotiation, we are asked, "What can you give to us? Can you commit a $100 billion commitment to invest in US manufacturing to create x-number of jobs?", how will we respond to that as a country, keeping in mind that our sovereign wealth funds are managed absolutely independently?
The second point is more regarding the domestic companies that we have in Singapore, whose margins have been shrinking even prior to this latest sell war. Whether the imports in the months to come come from China or from other countries where the duties are substantially higher, how will the Government be able to support domestic companies without any form of anti-dumping duties, keeping in mind that the margins are razor thin already, especially for our SMEs?
Sir, our companies as well as our sovereign wealth funds have major investments in America today and continue to see opportunities in US projects. They operate independently, as the Member said. They operate strictly on a commercial basis. They evaluate projects strictly on their own merits, not for diplomatic or political considerations.
So, they will continue with that approach and if indeed, the continued investments that we are making, that Singapore as a whole is making in the US, help to advance a bilateral relationship, so much the better. But we will not compromise our key principles of investing on a proper basis, commercial basis and evaluating projects on the basis that they are fundamentally good investment projects for Singapore.
On the second question on supporting companies, again, we have gone through that. We understand that there will be an impact on our local businesses. We will engage them more, understand better how exactly they are affected by the tariffs. A lot of this is still evolving, as many Members recognise. And so, as we get better information, as we drill down into some of the details, we will be in a better position to shape our responses.
Mr Zhulkarnain Abdul Rahim. Sorry, I meant Mr Sharael Taha.
Speaker, I would like to thank the Prime Minister for his assuring words on the uncertainty that is facing us today.
Sir, given the imposition of tariffs on our exports to the US, as Member Saktiandi Supaat has already highlighted, there could be significant implications for our semi-conductor and our biomedical sectors. Has there been any indication of a slowdown or withdrawal of foreign investments in Singapore?
My second clarification is, in light of the evolving global order or the transition, as the Prime Minister has mentioned, while we appreciate the grants and support measures to assist our companies and our workforce, how can Singapore adopt a more proactive stance in navigating this era of uncertainly? How do we find the opportunities in these troubled waters? What role can we play, especially in the global world order, and what unique value propositions can we offer to remain relevant and contribute meaningfully to this global economic transition?
Sir, on investments coming in to Singapore, I think these are still early days. At least in previous crises and slowdowns, we have continued to be able to attract a good and healthy pipeline of investments because Singapore's reputation as a trusted business hub is strong and companies do want to do more activities out of Singapore.
We hope this will continue to be the case, but it is still early days. It is hard to tell. We will continue to engage the key MNEs. What we do hear, for now, is that many are holding back – not so much that they do not want to come to Singapore, but they are just holding back on new projects, precisely because of the uncertainty that I highlighted just now.
That is why the concern is not just about tariffs alone, damaging though they are, but the wider uncertainty about potential changes in rules, which is causing companies everywhere to hold back on new projects, hold back on taking decisions. All that can easily tip the world into a slowdown.
On opportunities, Sir, I highlighted we are engaging our countries in ASEAN to see what more we can do as ASEAN to make ASEAN more competitive. There is renewed, I would say, emphasis and a strong desire to do more, particularly in this new environment. So, we are hopeful that we can push through some of these ASEAN initiatives.
There are other like-minded countries who believe firmly in a rules-based trading system, in open and free trade. We are in touch with them, engaging them to see what more we can do together.
As I mentioned in my Statement, even if the US has chosen to abandon the WTO, to reject WTO rules and to go in a more protectionist path, the rest of the world does not have to follow. There are will be a coalition of like-minded countries which we will be amongst them, identifying new opportunities for ourselves, finding ways to retain key elements of the multilateral system and seeing how we can evolve and shape a better global system together.
Mr Gerald Giam.
Sir, since the 10% tariffs imposed on Singapore are lower than regional competitors like Taiwan, South Korea and Malaysia, which face tariffs ranging from 24% to 32%, this could present a near-term cost advantage for Singapore firms exporting semi-conductors, telecommunications equipment and electronics to the US, relative to exports from these higher-tariff countries.
The Prime Minister just now acknowledged that this was a silver lining. But are our economic agencies stepping up efforts to help Singapore firms secure US demand in these areas before global buyers reorganise their supply chains and lock in new sourcing arrangements?
Certainly, I think this is part and parcel of the task force's strategy. We are looking at both the shorter term as well as the longer term, and some of these supply chain reorganisation will take some time. Logistics and some capacity have to be increased in order to open up new markets and new sources. So, I think some of these will take time to reorganise and that will happen in the medium to longer term, working with the industries, trying to attract more investments so that they are anchored in Singapore.
But always also bear in mind, as we have more investments into Singapore and taking advantage of a lower tariff, as the Member mentioned, to export to the US, our trade balance would start to shift. At some point in time, you will find that we are also going to face challenges as well. So, we have to exercise some care in organising this, but certainly, we will continue to explore.
Also bear in mind that unless we are in the same market, some of the components that we purchase will then become more expensive because they are going to face duties. But at the same time, some of the economies that are selling our products to may be exporting to the US. If they are facing a higher tariff from the US, then our exports may be affected because, then their demand will come down; they will buy less from us.
I think this is an entire global chain effect. We should not look at it just simply from any particular single segment of the trade because it is going to change the entire playing field. So, that is why the Prime Minister mentioned that this is going to be a new economic landscape that we need to appreciate, to understand how it is going to be reorganised and restructured.
One of the purposes of the task force is to engage the private sector, to engage the people on the ground who are operating this and to have a sense of where they are moving their pieces. Are they going to relocate their production base? Are they going to change their purchasing strategy? Where the products are going to come from and where our exports are going to?
All these, we need to have a better assessment. All these are in a flux today because everyone is still negotiating and they are still thinking through what they need to do. Particularly, in semi-conductor, it is a very complex supply chain. If you move one piece, you need to move the entire ecosystem. So, it is not so easy to adjust and to reconfigure the semi-conductor ecosystem.
Mr Xie Yao Quan.
Sir, the Prime Minister spoke about the rest of the world not needing to follow the US as it turns protectionist and about Singapore's hope to work with the rest of the world to double down on global integration. I agree with this point but my worry is about global leadership for and from the rest of the world to double down on this integration going forward. So, what is the Prime Minister's assessment of how the void in global leadership, left behind by the US, can be filled; and also how may Singapore contribute to and support this backfilling in the global leadership void?
While Singapore can try to do our best to speak up, to carrel and to engage like-minded countries, let us be realistic. We are not going to be able to fill the vacuum ourselves. We need other big players to step in. So, we are engaging all of them in Europe, in Asia, in the Middle East and hopefully, together as a coalition or as a broader, wider group of countries, there will be enough voices that share a common interest in keeping the WTO system going, updating it and maintaining our rules-based trading system. These are efforts that we will continue to press on.
Ms Hazel Poa.
Thank you, Speaker. If I may be allowed to explain what happened earlier. I did have questions, but as clarification was going on, I was revising my questions and you caught me —
No worries, go ahead.
Alright. I would like to seek confirmation that the latest round of tariff is a violation of the FTA between Singapore and the US, and if so, are we contemplating any action on that front? Given that we are a small country, are we exploring joint negotiations with other countries? I believe there are enough common interest for this to be feasible.
I also wish to note that I am glad to hear that the Government is trying to convert this challenge into an impetus to push for free trade with the rest of the world. I wish to convey my best wishes to the task force led by the Deputy Prime Minister Gan.
Sir, let me just explain the provisions under the FTA. The FTA provides for zero tariff on both sides – the US for us and us for imports from the US. Therefore, any imposition of import duty is a violation of the FTA. But there are exceptions that are granted under the FTA for emergency economic situations. We have that provision, too. In the event of an economic emergency, you have the right to invoke that provision to allow you to put in place measures, including tariffs.
And our understanding is that the US has now invoked emergency economic powers. And therefore, they are going under that provision to say, "we have the right to introduce that".
Of course, for parties to the FTA, you also have the right to challenge the assumption. And therefore, you go into a consultation, dispute resolution and to see how we can address the issue, whether first and foremost it is an economic emergency that entitles them to invoke that provision.
So, that is the technical part of the provision under the FTA. What we are doing now is, we are, first, going to embark on a consultation to work with them, to engage them, to first understand what their concerns are that caused them to introduce this basic tariff rate. And eventually, whether or not we want to take action is something that we will have to consider and if we need to take actions under the FTA that allows us to introduce counter-import duties on imports from the US.
We have already said that we do not anticipate the introduction of import duties on imports from the US for the time being. And therefore, I think we will just continue to focus on engaging with the US to find out what are their concerns, whether we are able to address their concerns, so as to, hopefully, as the Prime Minister said, if there is room to negotiate, we will see whether we can negotiate for a lowered or waiver of the import tariffs on Singapore's exports to the US.
But even if that is not possible, it is also useful for us to have this engagement to prevent further escalation of import duties, import tariffs on Singapore's exports. As the Member know, they are still in a flux and tariffs that we see today are not the final duties, and there could be additional duties, tariffs that could be imposed. So, I think it is very useful for us to continue this engagement.
I think the Member also earlier talked about whether we are looking at joining hands with our ASEAN partners to see how we can engage the US together, collectively. I think this is something that I mentioned earlier that we are working on. We are talking to our ASEAN counterparts and we are going to have our ASEAN Economic Ministers Meeting on 10 April to discuss this, how do we approach this issue, how can we engage the US collectively as ASEAN.
Ms Ng Ling Ling.
Mr Speaker, I want to thank the Prime Minister Wong for a very clear Ministerial Statement that helped Singaporeans know the times that we have entered since "Liberation Day" announcements and the hard work that the Deputy Prime Minister Gan will be doing for the task force.
My question is, how will our Government communicate to younger people in Singapore from here onwards? I was only in my mid-20s and working in the banking sector during the Asian Financial Crisis, when I experienced treasury profits, hard-earned over months, wiped out in days. And I was in my mid-30s when I was working in the social service sector and saw how corporates who had been supporting us, charities or the lower-income, with donations and volunteers, had to roll out very painful retrenchment programmes to keep the companies afloat and keep as many jobs as they can.
So, my question to the Prime Minister is, our youths as young as 18 years to maybe 35 years from my Youth Network (YN) shared with me that they really benefited from the Prime Minister's engagement with them through the YN platform; so, how will we engage them to help them understand what is going to come going forward and go through the hard ride?
Sir, Ms Ng is correct. Communications are important. Engagements are important. So, we will not just stop at putting out clips on social media or discussing this in Parliament because we are facing real threats, real dangers that all Singaporeans should be aware of.
And so, beyond discussing these issues in this House and sharing them on social media, we will be engaging different engagement sessions with young people, with Singaporeans from different segments. We do that each time we encounter threats, dangers or deal with a crisis. We have done that during COVID-19 when we had to repeatedly engage Singaporeans to address the concerns and to help them understand the nature of the threat and how we are to respond.
In the same way now, when we are dealing with a new situation that poses very real economic threats to our livelihoods and jobs, we will do the same in engaging Singaporeans, young and old.
Any more clarifications for the Prime Minister or Deputy Prime Minister Gan? No.
Order. End of the Ministerial Statement by the Prime Minister. We will now move on to the next Ministerial Statement. Minister for Home Affairs.
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