SINGAPORE – Singapore seems to have escaped a major hit from the US tariffs, with

a relatively low baseline levy of 10 per cent

.

But this is just a small part of the picture, say analysts, who note that the country will feel an outsized impact if tariffs put a damper on trade.

Mr Song Seng Wun, economic adviser at CGS International Securities Singapore, told The Straits Times: “Every big or small country that is hit by tariffs, Singapore is watching.

“Ultimately Singapore is looking at external demand and trade flows through its ports, to support economic growth and jobs creation.”

Ms Lorraine Tan, Morningstar’s director of Asia equity research, believes the Government is warranted in keeping its cautious outlook for economic growth at 0 per cent to 2 per cent.

The Monetary Authority of Singapore

expects the economy will be put to the test in the coming months

as trading partners are hit with higher tariffs.

Why are SMEs worried about tariffs?

Small and medium-sized enterprises (SMEs), which make up 99 per cent of businesses here, have asked for more support to navigate the uncertainty.

Companies with supply chains extending beyond Singapore could directly face higher tariffs if they sell goods to the US.

They often have less room than large conglomerates to absorb these costs and less power to pass them on to customers.

These businesses should assess how exposed they are to tariffs, and how they can remain competitive, said Singapore Business Federation chief executive Kok Ping Soon.

“The varied tariff landscape across Asia underscores the urgent need for businesses to acquire fluency in customs data and trade compliance issues, such as the basis for rules of origin and customs evaluation methods,” he added.

His association is also encouraging SMEs to explore new overseas markets which have free-trade agreements with Singapore. It is organising business missions to Thailand, Egypt, India, Saudi Arabia and Mexico in the coming months.

Mr Kok also cited the importance of

the Business Adaptation Grant

, which will be launched by October, to help companies adjust to the new tariff environment.

SMEs will get a higher level of support under the grant, which will be capped at $100,000 per company and require co-funding by firms.

Businesses that do not deal with the US could also be affected if their suppliers or customers are hit by tariffs, said the Association of Small and Medium Enterprises president Ang Yuit. “Some cases, they will find that demand goes away as their customers upstream are affected,” said Mr Ang.

As tariff rates on a slate of countries become clearer, SMEs are just beginning to make decisions on how to restructure their supply chains, he added, noting: “The decision-making process has many layers, from the cost of setting up a new plan in another country, to the different components that finally make up the finished good.

“While tariff (rates) seem to have landed, the decisions and plans for businesses have just started.”

What does this mean for jobs?

Companies ranging from delivery giant UPS to Monopoly maker Hasbro have recently announced job cuts as tariffs raise the cost of shipping goods to the US.

Singapore’s total employment has

continued to grow and retrenchments held steady

in the second quarter, preliminary Ministry of Manpower data showed earlier this week.

Employers are waiting to see how much the global economy will be affected by tariffs, Mr Song said, adding: “We know the growth momentum will slow down. We don’t know by how much.

“How much depends on whether the rest of the world will be affected by all these shifts in tariff polices. This will affect confidence, affecting business actions, job creation and employment.”

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Will the resilience of the stock market fade?

Singapore’s stock market enjoyed an unexpectedly robust first-half performance, with the Straits Times Index (STI) up around 10 per cent since the start of 2025.

Morningstar’s Ms Tan said the main risk to the market is not the direct impact of tariffs, but the possibility of slowing global demand and the realignment of supply chains.

“Consumer confidence is likely to be lacklustre given these uncertainties, and this could weigh on Singapore’s economic growth as well,” she added.

Ms Tan is also watching the earnings of banks, which have a major weighting on the local benchmark.

“If credit costs or net interest margins disappoint expectations, we could see share prices fall. Given the heavy weighting of banks on the STI, the index itself may reflect relative underperformance,” she said.

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