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The Workers’ Party is disappointed with the imposition of the baseline tariff rate of 10 per cent that the United States (US) President Donald Trump has imposed on Singapore, scheduled to take effect on 9 April. The Workers’ Party is particularly concerned over the effects of the tariffs on Singapore businesses and employment.
This unilateral act adversely affects the bilateral ties that Singapore currently enjoys with the US. Our nations have shared a long-standing, reliable, and steadfast relationship, with substantive cooperation across multiple fronts, on both economic and security fronts. The US is one of Singapore’s major trading partners, and its largest foreign direct investor.
Even though Singapore only faces the lowest-tier increase in tariffs (of 10 percent), the latest act has undeniably upended the global trade compact that was first established at the conclusion of the Second World War, with the General Agreement on Tariffs and Trade and, thereafter, the World Trade Organization. Retaliation efforts are also unfolding, sparking fears of an escalating global trade war. There is a sense of increasing uncertainty over the international economic landscape.
Experts largely agree that these tariffs will lead to broad disruptions in the global economy. Even so, it is useful to recognise that American trade policies are still evolving. Moreover, global trade is also driven by other regions, such as China, the European Union, and Southeast Asia.
As a small, open economy that is heavily dependent on international linkages, Singapore’s economy will inevitably be affected. This is especially the case for workers in our outward-facing sectors of the economy: trade, finance, and tourism. Our internationalised businesses—especially those based in countries that are facing a potentially higher rate of US tariffs than here—would be more adversely affected, too.
The Ministry of Trade and Industry has indicated that it will be reassessing the nation's 2025 growth forecast, which is currently between two and three per cent. A worsening economic outlook—or even a recession—will adversely affect employment. Tariffs may reignite inflationary pressures, which could exacerbate the already high costs of living.
The Workers’ Party believes that a rational and pragmatic approach is required to deal with the unfolding situation, at both the international and domestic level.
First, while the government exercises restraint in reacting to US tariffs, it should immediately commence bilateral negotiations, and we believe that no response should be ruled out, given the unprecedented nature of the act. Singapore must reserve its right to turn to relevant dispute settlement mechanisms, such as those outlined in the US-Singapore Free Trade Agreement or the World Trade Organization. We should also tap on our existing ties with other branches of the US government and business associations, such as the Congressional Singapore Caucus and the American Chamber of Commerce, to argue our case.
Second, we must take advantage of the Association of Southeast Asian Nations (ASEAN)’s combined economy—the fifth-largest in the world—to negotiate collectively with the US to increase our relevance and leverage. While this will undoubtedly require additional effort and resources, Singapore—with its history of trade openness—can advance the bloc’s strategic economic interactions with the Trump administration.
Third, we must further strengthen our regional trade relationships, both within ASEAN, as well as larger trade blocs of which we are part, such as the Regional Comprehensive Economic Partnership (RCEP) or Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). This will provide the necessary ballast to forgone trade with the US, while also signaling our continued commitment to an open global trading regime.
Fourth, 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 semiconductors, telecoms equipment and electronics to the US, relative to exports from these higher-tariff countries. Our economic agencies should step up efforts to help Singapore firms seize these opportunities as they arise.
Domestically, the Workers’ Party has long called for stronger social safety nets and better protections for our workers. Since our workers are also consumers, strengthening the position of the household will also provide a much-needed boost to domestic demand, which in turn will support a softening economy. We believe that redundancy insurance, as well as mandatory retrenchment benefits, should be put in place, so displaced workers will receive the support they need, should they become involuntarily unemployed, especially as a result of trade-related displacement. Our Members of Parliament have also offered various proposals to strengthen the circumstances of our workers. These include refining and better targeting our retraining and reskilling programmes, increasing accountability for skills transfer from foreign professionals to Singaporeans, banning noncompetes in employment contracts for low- and mid-level employees, protecting workers’ from predatory employment contracts, and uplifting our lowest-income workers with a statutory, universal minimum wage. These policies are even more pressing today, in a time of heightened uncertainty.
In addition, we also believe in the need to bolster the economic resilience of our domestic industries, to ensure they remain viable and can employ workers. Establishing an export-import bank can provide crucial trade financing to exporters and importers, at a time when a regionalisation strategy is becoming less an option and more an imperative. Our small and medium sized enterprises (SMEs) that experience trade shocks will also benefit from transition support, akin to what was provided during the COVID-19 pandemic. And setting up a secretariat, catering specifically for SMEs, will ensure that any assistance rendered is tailored, targeted, and coordinated.
Singapore will have to remain nimble and fleet-footed as it navigates this turbulent period, and Singaporeans must remain united and row in the same direction. The strength of our nation has always been unity in diversity, and this must include an openness to rational and responsible policy, proposed along all political quarters. It is only through welcoming such diversity of ideas that we will emerge stronger through the storm.
The Workers’ Party
8 April 2025
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