Singapore forms task force to support businesses against impact of US tariffs

Singapore: Singapore is setting up a national task force to support businesses and workers from sweeping US tariffs that could slow economic growth and affect jobs and wages, Prime Minister Lawrence Wong said in Parliament on Tuesday.

The task force, chaired by Deputy Prime Minister and Minister for Trade and Industry Gan Kim Yong, will include representatives from the city-state's economic agencies, the Singapore Business Federation, the Singapore National Employers Federation and the National Trades Union Congress.

Describing the global situation as "fluid", PM Wong said in a ministerial statement in Parliament that the task force will help businesses and workers address immediate uncertainties, strengthen resilience and adapt to a new economic landscape.

The tariffs are expected to dampen global growth in the near term, which will hit external demand for Singapore's export-reliant sectors, such as manufacturing and wholesale trade.

The global uncertainty and dampened sentiment will also impact some service industries, including finance and insurance, said Wong, who is also the finance minister.

The ministry of trade and industry is reviewing its 2025 growth forecast of 1 to 3 per cent, with a likely downward revision.

"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," the Channel News Asia quoted PM Wong as saying.

Beyond immediate concerns, Wong said the tariffs confirm the stark reality that "the era of rules-based globalisation and free trade is over".

Speaking after PM Wong, Deputy PM Gan noted that it is "still early days" and more time is needed to get a better understanding of the tariffs' impact on Singapore's economy.

The newly-formed task force is still working out the details of its composition and key tasks, but one of its focuses will likely be on communication and information sharing, added the deputy prime minister.

The tariffs, announced by US President Donald Trump on April 2, impose a universal 10 per cent duties on all imports into the country, with higher rates for countries deemed to have treated the US "unfairly".

Singapore, which currently imposes zero tariffs on US imports, is still subject to the baseline 10 per cent rate.

"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 per cent tariff," said Wong, pointing out that Singapore runs a trade deficit with the US and maintains open trade through its bilateral free trade agreement.

"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," the prime minister added.

"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," Wong said.

"It simply means that American consumers are buying more from the world than the world is buying from America," the channel quoted the prime minister of trade-focused city-state as saying.

The US' focus on the trading of goods "only gives a partial picture", as the US runs a surplus with many of its trading partners in services, he added. These include the exporting of software services, education, entertainment, and financial and business services to the world.

Wong criticised the US approach as a "fundamental rejection" of World Trade Organisation principles, such as the Most Favoured Nation (MFN) rule, which states that every member must treat all other members equally.

The principle has "long been the bedrock of the multilateral trading system" in ensuring a level-playing field for both big and small countries, he said.

The US move, he said, undermines this principle and opens "the door to selective country-by-country trade relationships, based on unilateral preferences".

If other countries adopt the same approach, the rules-based trading system will unravel -- a reality that will spell trouble for all nations, especially for smaller countries like Singapore, he said.

"Small countries have limited bargaining power in one-on-one bilateral negotiations so the major powers will dictate the terms and we risk being marginalised and sidelined," he added.

The likelihood of a full-blown global trade war is growing, the prime minister cautioned. While Singapore will not impose retaliatory tariffs, other countries may do. China has already announced countermeasures, and the European Union is evaluating its response.

Wong said there is "a brief window" for countries to negotiate with the US before the higher tariff rates take effect on Apr 9.

"It may be possible for some rates to be lowered, but we have to be realistic," he told the House.

Wong said, "Once trade barriers go up, they tend to stay up. Rolling them back is much harder...the uncertainty generated by such a drastic move will dampen global confidence and growth." The tariffs have already shaken stock markets and dented business and consumer confidence, which may take a toll on global trade and investments.

Singapore economic agencies have been in touch with multinational and local firms since the US announcement, Wong said.

Businesses are fearful that changing rules will leave them with stranded assets. This deep uncertainty, he said, could trip both the US and the global economy into a recession.

Beyond economics, Wong sees the new wave of protectionism as a threat to global norms and institutions, with more countries turning away from a "win-win" cooperation to a "me first, win-lose" mindset.

For businesses, short-term support was announced in the form of corporate income tax rebates, as well as schemes to boost productivity, competitiveness and pivot into 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," said Wong.

In particular, Singapore will strengthen its collaboration and integration within the Association of Southeast Asian Nations (ASEAN), a 10-nation regional economic grouping.

Wong also cited recent engagements with Malaysian Prime Minister Anwar Ibrahim as an example of these efforts.

ASEAN economic ministers will hold a special meeting later this week to discuss ways to boost intra-ASEAN trade and reaffirm the bloc's commitment to regional economic integration.

The deterioration of the US-China relationship is a major concern, said the prime minister.

"There are fewer channels for dialogue, which can serve as guardrails to manage the relationship," Wong said. "If the disputes escalate and destabilise US-China relations, the consequences for the world would be disastrous." At the same time, other countries, including in Europe, may follow suit to protect their critical industries from competition. So, the latest US tariffs "may just be the beginning of more increases to come globally", Wong said.