Singaporeans must brace themselves for more shocks to come as the world enters a new phase that is "more arbitrary, protectionist, and dangerous", said Prime Minister Lawrence Wong in a YouTube on Apr. 4.
"The global calm and stability we once knew will not return anytime soon. We cannot expect that the rules which protected small states will still hold," he added.
While acknowledging that the road ahead will be harder, PM Wong called on Singaporeans to stay"resolute and united" so that the country will "continue to hold its own in this troubled world".
PM Wong was commenting on the implications of the tariff that the United States (U.S.) government would be imposing on its trade partners worldwide, including Singapore.
Similar sentiments were echoed by Senior Minister Lee Hsien Loong and Foreign Minister Vivian Balakrishnan on Apr. 3, who both urged Singaporeans to be mentally prepared for the bumpy ride ahead.
On Apr. 2 (Washington D.C. time), Trump announced that the U.S. would be imposing a slew of tariffs on imports from other countries, including its allies in the European Union, East Asia, and Southeast Asia.
Singapore is one of the 11 countries that was hit with a baseline tariff of 10 per cent, instead of the higher"reciprocal" tariffs.
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'Seismic change' in global order
According to PM Wong, the Trump administration's announcement"leaves no room for doubt" that a seismic change in the global order is coming:
"For decades, the U.S. was the bedrock for the free market economics of the world. It championed free trade and led efforts to build a multilateral trading system, anchored by clear rules and norms, where countries could achieve win-win benefits through trade.
This World Trade Organisation (WTO) system brought unprecedented stability and prosperity to the world — and to the U.S. itself."
However, the U.S. is now ending this era of rules-based globalisation and free trade with the widespread imposition of tariffs, he said.
Rather than reforming the WTO system by updating the rules and making the system fairer — as suggested by countries like Singapore — the U.S. is effectively abandoning the WTO system it had created.
Possible full-blown global trade war
While the tariff's direct impact on Singapore may be"limited" for now, as it is placed in the lowest base tier, PM Wong warned that the U.S. approach would bring wider and more profound consequences.
"If other countries adopt the same approach as the U.S — abandoning the WTO, and trading only on their preferred terms, country by country — it will spell trouble for all nations, especially small ones like Singapore.
We risk being squeezed out, marginalised, and left behind."
Concurrently, Singapore can also expect a strong global response to U.S.' tariffs, which increases the likelihood of a full-blown global trade war.
"The impact of the higher tariffs, plus the uncertainty of what countries may do next, will weigh heavily on the global economy. International trade and investments will suffer, and global growth will slow."
Compared to other countries, PM Wong said that Singapore will take a bigger hit because of its heavy reliance on trade.
Acknowledging that no one can predict how the current situation will unfold in the future, PM Wong warned that the last time the world experienced a similar trend was in the 1930s, when trade wars escalated into armed conflict and, eventually, World War II.
Singapore to build up capabilities in a 'troubled world'
Given these challenges ahead, PM Wong urged Singaporeans to be"clear-eyed about the dangers that are building up in the world".
"Global institutes are getting weaker; international norms are eroding. More and more countries will act based on narrow self-interest, and use of force or pressure to get their way," he added.
Nevertheless, PM Wong expressed his confidence in Singapore in navigating the"harsh reality" of the world today:
"We will stay vigilant. We will build up our capabilities. We will strengthen our network of partnerships with like-minded countries. We are more ready than many other countries, with our reserves, our cohesion, and our resolve."
In his Apr. 3 Facebook post, SM Lee also said that PM Wong and his team will"continue to monitor developments closely" and stand ready to "intervene to help households and businesses if necessary".
Singapore to engage U.S. on tariffs: DPM Gan
On Apr. 3, Deputy Prime Minister and Minister for Trade and Industry Gan Kim Yong stated that Singapore was"naturally disappointed" by the news and will try to engage the U.S. at multiple levels to understand the Trump administration's areas of concern.
Additionally, the two countries also built a strong economic and commercial relationship over the years, with one example being the over-two-decade-old U.S.-Singapore Free Trade Agreement, said DPM Gan.
Although the agreement stipulates that Singapore can take countermeasures and seek dispute resolution against the U.S., DPM Gan shared that Singapore will not be taking retaliatory actions.
Instead, Singapore will try to engage the U.S. at multiple levels to understand the Trump administration's areas of concern and see if they can be resolved.
"We'll be engaging at the ministerial level, at the official level. Ambassadors in the U.S. will also be engaging them, and our businessmen will also be engaging their private sector," added DPM Gan.
