It has been over a year since US President Donald Trump introduced his Liberation Day tariffs, and Singapore made it through in better shape than expected.
The economy grew 5 per cent in 2025, far above the downgraded 0 per cent to 2 per cent projections from the Ministry of Trade and Industry post-Liberation Day. Exports surprised on the upside. Electronics and semiconductor-related demand stayed strong. There were no broad-based job losses.
But that was the easy part.
After the US Supreme Court ruled in February that the President lacked authority to impose the Liberation Day tariffs under emergency powers, markets briefly hoped Washington would pull back. Instead, the US administration switched tools.
They announced a temporary 10 per cent import surcharge under Section 122 that Mr Trump has threatened to raise to 15 per cent. More importantly, they doubled down on imposing tariffs under Sections 232 and 301.
Section 232 allows the US to tariff entire product categories on “national security” grounds – from semiconductors and electronics to pharmaceuticals and industrial inputs. Meanwhile, Section 301 allows the US to impose tariffs on countries deemed to be engaging in unfair trade practices.
These are more insidious because, unlike Section 122 tariffs that are time-bound, these statutes embed trade restrictions into domestic US law. They widen the scope from countries to sectors and practices – making tariffs more durable, selective and harder to negotiate away.
It speaks to a hardening in the US administration’s stance – an attempt to make tariff and trade restrictions a wide-ranging and permanent tool to pull production and supply chains home, reduce trade deficits and extract leverage from trade partners.
For Singapore, a small, trade-dependent economy, the danger is not just the tariff rates. It is the heightened business costs that come with operating uncertainty.
Firms cannot assume that conditions for access to critical export markets will hold through the life of an investment. Suppliers build buffers and contingency clauses into contract terms, and buyers seek alternative sources “just in case”. Investment committees apply higher hurdle rates that lead to decision paralysis or demand contingency plans that eventually shift production closer to end-markets.
Long before the actual tariffs hit Singapore, the US weaponisation of Section 232 and Section 301 could inflict pain on the Republic’s economy by redirecting investment and supply chains. It also raises real concerns about Singapore’s value as an investment destination and status as a trusted trading hub.
Section 232 has implications for Singapore, given that pharmaceuticals and electronics, especially semiconductors, account for about half of Singapore’s manufacturing output and around 40 per cent of its exports to the US.
So far, the near-term trade hit has been limited for Singapore. The first phase of semiconductor measures announced in January imposed a 25 per cent tariff on a narrow set of advanced AI chips that are not manufactured here. But a broader review due later in 2026 could widen the coverage.
Singapore is also cushioned by the wider AI chip boom. Much of Singapore’s semiconductor exports are the logic, memory and speciality chips that sit upstream and downstream of AI systems. Integrated circuits exports rose by about 16 per cent in 2025, and a significant share of our chip shipments end in US data centres.
If tariffs extend beyond the top-end accelerators to mainstream AI-related semiconductors, they will hit a core manufacturing export engine.
