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While Singapore has been spared from the brunt of new US tariffs announced on April 2, its deep integration in global trade networks leaves it vulnerable to second-order effects as key partners face steep levies. With a 90-day enforcement pause now in effect, governments are scrambling to secure exemptions and adjust supply chains.
“Asia-Pacific’s response to ‘Trump 2.0’ tariffs prioritizes negotiation over retaliation while bolstering growth through domestic policy support,” said Shujie Tan, Country Head, Frost & Sullivan Singapore. “Singapore’s agility, neutrality, and digital trade strength position it well to weather the disruption but not without challenges.”
The US has imposed a baseline 10% tariff on all trade partners, with significantly higher rates for key Asia-Pacific exporters. While Singapore’s direct exports to the US were valued at just USD 30 billion in 2023, its position as a global transshipment and financial hub leaves it exposed to a broader slowdown. Sectors like pharma and semiconductors, which comprise a significant share of Singapore’s exports, are currently exempt, but food and edible products are included.
“Asia-Pacific (excluding China) GDP is projected to slow to 2.7%, from pre-tariff expectations of over 3.0%. Vietnam could see its growth decline by 0.8 percentage points. Japan and South Korea face GDP downgrades of 0.5 to 0.4 percentage points, respectively,” Shujie Tan added.
Singapore faces indirect headwinds from declining trade volumes, particularly as economies like China, Japan, Korea, and Vietnam all major trade partners absorb the fallout. Manufacturing hubs hit by the tariffs could scale back operations or shut down, triggering a ripple effect across supply chains. This could slow Singapore’s maritime, cargo, and trade finance sectors.
“Under this pessimistic scenario, global GDP could slip to 2.4%, intensifying fears of a synchronized trade-led downturn,” said Shujie Tan. “This will challenge Singapore’s service-driven economy, especially in trade-dependent industries.”
To navigate the evolving landscape, Frost & Sullivan recommends:
• Market Diversification: Leverage Singapore’s 27 FTAs, including CPTPP and RCEP, to reduce reliance on US-linked exports.
• Supply Chain Reconfiguration: Attract redirected investments from higher-tariff markets such as Vietnam (facing a 46% tariff).
• Scenario Planning: Model cost impacts and prepare for potential surcharges on critical exports like semiconductors.
• Focus on Services: With services not covered under tariffs, Singaporean firms in tech, finance, and logistics can maintain US market access.
“Singapore’s strength lies in its ability to pivot quickly,” said Shujie Tan, Country Head, Frost & Sullivan Singapore. “Relocating manufacturing to lower-tariff countries or increasing local and ASEAN sourcing will be key strategies. Meanwhile, companies should explore alternative markets through Singapore’s robust FTA network and enhance scenario planning using trade analytics to forecast cost impacts and prepare for escalation particularly in high-value sectors like semiconductors and pharmaceuticals.”
“Enterprises must act swiftly to reorient supply chains and explore alternative markets,” said Richard Wong, Associate Partner, Frost & Sullivan. “Frost & Sullivan stands ready to support clients in identifying resilient growth opportunities.”
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