The US-China Trade War Heats Up—What It Means for Singapore

As the U.S.-China trade war intensifies, Singapore finds itself in an uneasy position—deeply exposed to economic disruptions despite not being directly targeted by Washington’s tariff measures. President Trump’s latest round of tariffs, primarily aimed at Chinese imports, was also extended to Mexico and Canada before a temporary reprieve. Beijing’s response—retaliatory tariffs, restrictions on critical exports to the U.S., and an inquiry into Google—has further unsettled markets. For Singapore, a crucial intermediary between China and the West, the stakes are high. Its economy, reliant on trade, shipping, and its role as a strategic hub for American and Chinese businesses, is deeply entwined with the shifting tides of global commerce. Though spared from direct U.S. tariffs, the city-state remains vulnerable to the ripple effects of an escalating economic standoff.

Singapore’s Foreign Minister, Vivian Balakrishnan, addressed the rising tensions in Parliament on February 4, emphasizing the significance of the U.S.-Singapore Free Trade Agreement (FTA). He noted that since its implementation in 2004, the FTA has tripled bilateral trade and consistently ensured a U.S. trade surplus with Singapore. He stated that Singapore is unlikely to face direct tariffs, as the United States maintains a trade surplus with the country. However, he cautioned that Singapore must remain vigilant and prepared for economic turbulence. As a small, open economy where trade exceeds three times its GDP, Singapore would inevitably feel the effects of any disruption to global supply chains or economic integration.

The minister responded to Nominated MP Neil Parekh’s concerns about Singapore-U.S. relations after President Donald Trump’s inauguration on January 20 and the broader impact of U.S. tariffs. On February 4, the U.S. imposed a 10 percent tariff on Chinese imports. In retaliation, China announced that it would impose 15 percent tariffs on U.S. coal and liquefied natural gas, along with 10 percent tariffs on crude oil, farm equipment, and certain automobiles. Set to take effect on February 10, these tariffs could prompt further U.S. countermeasures, escalating trade tensions and adding to global economic uncertainty.

Despite President Trump’s reputation for straining diplomatic ties, cutting foreign aid, and withdrawing from several international agreements—including those affecting Southeast Asian nations—Singapore remains confident in its relationship with the United States. Foreign Minister Vivian Balakrishnan emphasized that the strong, multifaceted ties between the two countries have been cultivated across both Democratic and Republican administrations for over 60 years. Singapore, he said, looks forward to deepening bilateral cooperation under Trump’s leadership.

The U.S. remains Singapore’s top trading partner in services, its second-largest partner in goods, and its largest foreign investor. Dr. Balakrishnan highlighted that U.S. investments in Singapore surpass those in China, India, Japan, and South Korea combined, with over 6,000 American companies operating in the city-state. At the same time, Singapore ranks as the third-largest Asian investor in the U.S., with around 200 Singaporean firms operating across 40 states. Bilateral trade and investment between the two nations support more than 350,000 American jobs.

Beyond trade, Dr. Balakrishnan underscored the crucial role of U.S. engagement in the Asia-Pacific, providing security, stability, and economic opportunities. 

Singapore finds itself in a precarious position, deeply intertwined with both the U.S. and China due to its strategic location and economic reliance on both powers. Like a child caught in the middle of warring parents, it has little choice but to navigate the tensions carefully. The minister pointed out that even the U.S.’s relationships with its own allies and neighbors are evolving, further complicating the global landscape. While Singapore may prefer to stay out of the conflict, it has no real escape—just as a child cannot avoid the consequences of a bitter parental divorce.