4 April 2025, Singapore
My fellow Singaporeans, I’ve said before that the world is changing – in ways that will disadvantage small open economies like Singapore.
Some had previously questioned this assessment.
But the recent “Liberation Day” announcement by the US leaves no room for doubt.
It marks a seismic change in the global order. The era of rules-based globalisation and free trade is over. We are entering a new phase – one that is more arbitrary, protectionist, and dangerous.
For decades, the US was the bedrock for the free market economies 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 WTO system brought unprecedented stability and prosperity to the world, and to the US itself.
To be clear, the system is not perfect. Singapore, and many others, have long called for reform – to update the rules and to make the system better. But what the US is doing now is not reform. It is abandoning the entire system it had created.
Its new approach of reciprocal tariffs, country by country, is a complete rejection of the WTO framework.
The US has placed Singapore in the lowest base tier – with a tariff of 10%. So the direct impact on us may be limited – for now. But there are wider and more profound consequences. If other countries adopt the same approach as the US – abandoning the WTO, and trading only on their own 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.
We can also expect a strong global response to America’s tariffs.
Singapore has decided not to impose retaliatory tariffs. But other countries may not exercise the same restraint.
The likelihood of a full-blown global trade war is growing.
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.
Singapore will take a bigger hit than others, because of our heavy reliance on trade.
The last time the world experienced something like this was in the 1930s. Trade wars escalated into armed conflict, and eventually the Second World War.
No one can say how the current situation will unfold in the coming months or years.
But we must be clear-eyed about the dangers that are building up in the world.
Global institutions are getting weaker; international norms are eroding. More and more countries will act based on narrow self-interest, and use force or pressure to get their way.
This is the harsh reality of our 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.
But we must brace ourselves for more shocks to come. 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.
I am sharing this with you so that we can all be mentally prepared. So that we will not be caught off guard. Let us not be lulled into complacency. The risks are real. The stakes are high.
The road ahead will be harder. But if we stay resolute and united, Singapore will continue to hold its own in this troubled world.