Slower growth, souring business sentiment: How Trump's tariffs could hurt Singapore's economy

DAMPENING EXPORTS

Given Singapore’s small size and high dependence on trade, its economy has limited options if US tariffs slow global trade and growth, analysts said.

Reduced US imports would likely dampen Singapore’s export growth, according to Mr Ray Farris, chief economist at Eastspring Investments. The uncertainty surrounding global trade could also weaken business sentiment.

Ms Sheana Yue, an economist at Oxford Economics, pointed out that business investment in Singapore is closely linked to exports.

“We suspect business sentiment will sour over the coming quarters,” she said.

However, she does not expect a severe slowdown. “Our modelling suggests GDP will slow by only 0.4 per cent from our baseline in Q1 2026,” she added.

Mr Brian Lee, an economist at Maybank Securities, highlighted that Singapore’s outlook is supported by easing monetary conditions, the construction of major infrastructure projects and an expected “generous election Budget”.

Singapore’s Budget statement will be delivered on Feb 18, and the General Election must be held by Nov 23.

“We are projecting 2025 GDP growth slowing to 2.6 per cent from the 4 per cent flash estimate in 2024 – our forecast lies at the upper end of MTI’s 1 per cent – 3 per cent range,” he said.

TARIFFS ON CHINA TO HAVE BIGGER IMPACT

China, one of Singapore’s largest trading partners, is expected to feel the brunt of US tariffs, which will in turn affect Singapore. 

North American trade is largely contained within the US, Canada and Mexico, said Mr Mohi-uddin, whereas a drop in China’s exports to the US could reduce Chinese demand for goods and services from the rest of Asia.

Ms Yue said Singapore’s trade volume with China is 20 times larger than its combined trade volume with Canada and Mexico. 

As Singapore’s other trade partners also have strong ties with China, the ripple effects could be significant. 

“The US is also likely to scrutinise Singapore’s relationship with China, especially following news of Nvidia chips being procured illegally by DeepSeek in Singapore,” she added.