Singapore's advantage over regional rivals may slightly decrease due to the US imposing new 15% tariffs, but analysts indicate the market is resilient to this change.
Redaksiya reports that the US's new 15% general tariff on imported goods could reduce Singapore's advantage over its regional competitors. According to Raisah Rashid, global market strategist at JPMorgan Asset Management, "As the tariffs are broadly applied, Singapore loses some competitive advantage as the playing field is now at 15%." Barnabas Gan, chief economist at RHB, echoed this sentiment, stating that the "level playing field" could disrupt part of Singapore's export competitiveness.
US President Donald Trump announced the new tariff rate over the weekend, but details on how the new tariff will be applied have not yet been released. Deputy Prime Minister Gan Kim Yong said on Sunday that Singapore wants clarity from Washington on the tariffs, and there is a possibility the 15% rate could apply to Singapore. Singapore was previously subject to a 10% base duty, while some other countries faced higher reciprocal tariffs. Brian Lee, an economist at Maybank Securities, stated that despite the increase, Singapore's effective tariff burden remains the lowest in the region by a wide margin. He noted that there will be a 1.8 percentage point increase in Singapore's US tariffs, up to approximately 6.9%. "This effective tariff rate remains the lowest by a wide margin in ASEAN," he said, noting that the exemptions from last year's reciprocal tariffs are still in place. He added, "Singapore remains the ASEAN country with the largest share of goods sent to the US (such as semiconductors, electronics, and pharmaceuticals). Exempted goods account for more than 60% of Singapore's shipments to the US."
Edward Lee, chief economist at Standard Chartered, added that Singapore's competitive advantage "goes beyond a rudimentary calculation of tariff rate differentials." "Competitiveness will encompass many other aspects, such as institutional stability, policy reliability and stability, strong financial capacity, connectivity, productivity, and expertise," he said. The Economic Strategy Review aims to further enhance Singapore's comparative advantage, allowing the country to consolidate more in new and emerging sectors. He added, "This will help improve the resilience of our economy." Mr. Gan of RHB also noted that Singapore has strong technical capabilities in precision engineering, aerospace components, pharmaceuticals, and other high-value manufacturing segments. He said these strengths "continue to differentiate Singapore." He added that these advantages are "further strengthened by Singapore's reputation as a reliable and trustworthy trading partner."
According to analysts, Singapore also has financial reserves it can tap into if needed. Mr. Lee of Maybank noted that the budget surplus for FY2025 is expected to be higher than anticipated and can be drawn upon if necessary. He said, "Singapore has ample financial reserves to implement additional support measures to cushion the economic impact." Heng Kun How, head of market strategy at UOB, said strong economic growth is also expected this year. He told CNA938, "We have a lot of budget, we have a lot of flexibility." He said that if small and medium enterprises or exporters need help, or if workers need assistance, Singapore will be able to provide support. Singapore's main Straits Times index rose 0.47% on Monday. Thilan Wickramasinghe, head of research at Maybank Securities Singapore, said it is still too early to assess the overall impact for Singapore. He said, "We think markets are waiting for more clarity on the implementation of the new tariff and what it means for existing trade agreements." However, he remained optimistic, noting that the Singapore market has generally benefited from global geopolitical uncertainty. He said, "It offers a certainty premium related to policy, financial, and political stability," adding that the recent 2026 budget has provided further support for market resilience.
Jeremy Tan, CEO of Tiger Fund Management, said Singapore is resilient and defensive. He told CNA's Asia First program, "Singapore has seen a lot of capital inflows during uncertain times. There are many 'blue chips', many (dividends) that investors find comfort in such uncertainty." Ms. Rashid from JP Morgan Asset Management said investors should focus on sustainable trends such as advanced semiconductor packaging, artificial intelligence applications and adoption, and green energy. She said these could be favorable for semiconductor and telecommunications-related stocks.