This is how Singapore can emerge stronger in a ‘win-lose’ world (2025)

When global trade relations based on a level playing field are threatened with collapse, how should Singapore respond? Senior Minister Lee Hsien Loong offered his views at a dialogue with union leaders on April 14. The following are edited excerpts from his speech.

We have gone through many crises before over the years. We have gone through the global financial crisis, before that, Asian financial crisis. We had Sars.Most recently, we have had Covid-19. And every now and again something happens in the world, we have carried along, and we have to batten down our hatches and see it through. And every time we have succeeded, so we haveconfidence. But one important thing which you must understand is that every time that happened, we had two big things going in our favour.

One, within Singapore,we were doing the right thing. We could get united. We could get our act together.We could respond with the right policies, even painful ones. And we could get the system, get ourselves sorted out.

Two, every time we got into trouble... Singapore was part of a working global economic system, trading system. And thattrading system promoted free flow of trade, free flow of investments; it encouraged MNCs to look for places to do business. We were efficient. We were doing well. We came out from trouble, we plugged back in. We could resume growing, resume developing, resume succeeding.

It is a global financial system, the WTO system. And that was what helped us.It gave countries big and small alevel playing field. Whether you are a big country or a small country, under theWTO system, the rules are the same, your access is the same.

Let us take anexample, if the EU raises tariffs on cars from Japan. In order to protect European cars, you raise tariffs on Nissan or Toyota, then you must charge the same tariff on cars from every other country; Chinese cars, Korean cars, Indian cars, American cars. You have to treat them the same. If Singapore had cars to export, Singapore would also be charged the same tariffs.

On the other hand, if we give a concession to a country – for example, if Australia says, “I allow rice from India to be sold duty-free”, then they have to dothe same for rice from all other countries. You can protect yourself, but you cannot discriminate between your partners. And that is called MFN – Most Favoured Nation.

What is different this time is that the US does not want MFN. They want todismantle the system. They want to replace MFN with reciprocal tariffs, meaning I would not treat everybody equally. I want to treat each person, each partner, one-on-one... Why not we treat this one-on-one, like arm wrestling. Let’s see who has got more biceps, who has got a stronger arm, and we will see who is stronger. We willget more that way.

It is a fundamentally different kind of world which the US islooking for and pushing for. And the approach is not win-win, but win-lose.

Why this is bad for the world

First, you are going to have different rules for different countries. Smallcountries will suffer because they have no bargaining power. But even big countries will not do well because there is going to be a lot of confusion, a lot of uncertainties, a lot of differences in the rules. And far fewer opportunities to trade, to invest, to do business together.

Second, the tariffs – whether they are equal or unequal – and in this case, they will become unequal – will choke off trade, will raise costs, and will dampen growth. In the 2000s... the US tariffs were onaverage at about 1 per cent. Now, already they are at about 10 per cent, at a level which has not been there for 80 years.

And if in 90 days’ time, the rest of the reciprocal tariffs come in and they goto 30, 40, or sometimes nearly 50 per cent, then the US tariffs will be even higher than they were before the war, during the Great Depression, when the US pushed the tariffs right up. And that worsened the Depression for the US and for the world.

Furthermore, this is not the end of the story, because tariffs in the bundle so far have not counted two products – pharmaceuticals and semiconductors. Pharmaceuticals and semiconductors may have been feeling happy for a shortwhile, but America has made it very clear it is coming soon. And that will potentially hit Singapore quite hard, because pharmaceuticals and semiconductors are a significant part of our economy. So that is from the immediate impact of the American tariffs.

But when other countries retaliate, then you must expect back and forth, tit-for-tat. It has happened with China. It will happen with other countries. Then it will cause a downward spiral and the impact will be even worse.

Fourth, it is going to be very disruptive. If the supply chains are disrupted, if you get hit by 100 per cent tariffs – companies in China are making Christmas trees for America for Christmas; 150 per cent tariff – Christmas is not going to come. If you have got such a tariff on pharmaceuticals and semiconductors in Singapore, are we going to have Christmasor not? What it means is that industries can be disrupted. Businesses can be totally turned upside down. You may have the whole business model suddenly disappear... you may find yourself all of a sudden with a lot of surplus workers. How to look after them? And that can very quickly lead to recession.

Fifth, with all these new tariffs – this is something which is going to last a verylong time. It is not going to go away soon, because once you put in a tariff, once you protect your market, it is very difficult to take it away. People get used to it.

To go from where the Americans were, before the war, when they had hightariffs, to where they were by 2000 when the tariffs were 1 per cent, nearly zero, that was a nearly 80-year process, gradually bringing things down. So now, if the tariffs go up, they stay up for a while. If you want to bring them back down, I think that is going to be a long process. It is not going to disappear. So that is going to bea long problem.

Impact on Singapore

What is the impact on us? Immediately, the impact on us is – growth. Thisyear, we were hoping for 1 to 3 per cent growth. That was what we announced around Budget time. But with all this uncertainty in the world, MTI hasrevised the forecast. They have just put up the new forecast today; they put it down to zero to 2 per cent. Do you know for sure? No. Could it be zero? Possible. Can it be negative? Will we have a recession this year? When we look at the numbers, we do not think so, but it could happen.

So the difference between this time and previous crises is: Previously youcome out, you can come out into a world which is working and we fit in, we workagain. This time, we are okay, but the world is not going to be okay, and we have to do our best to make sure that we look after ourselves in this much less hospitable world.

That is just on the economic side. On the geopolitical side... we must expect more US-China tensions, and therefore a less tranquil, less stable region.There will be more demands on us to work very hard, to be friends with both, and to find our own way forward without getting into trouble.

I think for Singapore, it means some very serious implications. This time isdifferent. So, what can we do about it? I think there are two areas where you have to think about – one internationally and the other one domestically.

Singapore’s response – international

Internationally – I think we have to continue to support free trade,multilateralism, the WTO. To try to keep the system going and not have it collapse, even though the US is abandoning the rules. The US is the biggest economy. They come out, it has a significant impact on the rest of the world. But the rest of the world is still there, and if we can work together, I think we have a fair shot at keeping the system up.

The second thing we can do is to promote trade arrangements with like-minded partners. For example, we have the Asean group. We have an Asean Free Trade Agreement. The EU is a major partner, and we can do business with the EU. Asean can have an FTA with the EU, negotiate with them.

Thirdly, externally we need to do more with our Asean partners within Asean. For example, Singapore andMalaysia, we are talking about the Johor-Singapore SEZ. In Johor, companies can go there, they can have favourable terms and Singapore companies can prosper.Malaysian business will benefit, Malaysia will benefit, and foreign companies can be there and be in Singapore and therefore they also can benefit. And in the process, Singapore and Malaysia, we work closer together, that is good.

When thathappened, there were reports in the Indonesian newspapers to say, “Well, Singapore and Malaysia are doing an SEZ, what is Singapore doing with Indonesia?” And the answer is, we are doing things with Indonesia but I think there is a certain amount of competition, because they see us as being able to add value. And I hope that with this pressure within Asean, we will do more.

So internationally, globally,with WTO – try and keep the system intact. Big partners between trading groupscan come together and form bigger blocs. Within Asean, try to make Asean stronger, more relevant. And Singapore, we are small, but our trade is not small. Ithink we have some contribution to make.

Singapore’s response – domestic

We have to respond to the new situation domestically. And I will say it in threeways. First in terms of practical support, second in terms of psychological preparation and third, politically.

In terms of practical support, we need to help households, we need to help businesses, and we need to keep the economy growing... Typical households this year would be getting around $4,000 in various forms of assistance. We are helping workers who are displaced, for example with the Jobseeker Support Scheme. Overall, I would say the Budget package we have is enough for now, but if the situation gets a lot worse, we will do more and I can assure you, we are able to do more.

We have to help the businesses, too. We have set up the Economic Resilience Taskforce under DPM Gan Kim Yong in order to navigate the uncertainties; and to help businesses transform themselves. So it is not just to deal with immediate problems, it is also to deal with the longer term.

Secondly, I think we need to be psychologically prepared. We need to beprepared for a more troubled world. You must know that bad weather is coming. But at the same time, we can take comfort knowing that other countries are also facing similar challenges, and Singapore is readier than most of them to deal withthis challenge. Readier because we have the plans, we have the resolve, we have the experience, we have the resources, we have the unity. We are ready to do this, and we can do this together.

One of the important things which we must do if we are going to go through this together, is to look at fault lines, and stresses and strains which will build up inour society. Because if you want to go in and say, “Let’s be united,” it is not just wearing the same T-shirt. It is making sure we look after one another, take care of one another. I think that is a very important mindset whichwe must have during a crisis, going into a crisis, which we are able to do.

If you can do all that – look after the households, look after the physicalneeds, make sure we are psychologically prepared – then we can also address the political issue, which is to unite as one Singapore team, working closely with the government. And you need to have a good government, an effective government,a strong government, in order to take care of Singapore. And it has to be strongdomestically, in order to be strong internationally.

Let me explain this. I think when you say on foreign policy, Singapore mustspeak with one voice, I think everybody will agree. Even the opposition agrees. But the opposition goes one further. They say, well, overseas, we stand together. Domestically, let’s challenge. Now, that is a problem. Why is that a problem?

I tellyou, I have been attending international conferences for 20-something years – infact, for 30, 40 years, but last 20 years as PM.

Let me tell you my experience from these conferences. We meet each otherregularly, because the conferences happen every year, every other year. This time I see you, maybe next time I see your successor. And in some countries, every time I go to a conference, I see a new PM.

Sometimes, I see the PM, I look at hisdelegation, I see some of the faces there, I read the newspapers, I know that some of those people are hoping to be the next PM. And sometimes it turns out so. So when you meet each other, I assess you, you assess me.

I will ask myself, “I am talking to you now. Your Excellency, Prime Minister, yes, sir.” Will you still be here in five years’ time? Will your policy still be here in five years’ time? Can I do business with you, commit and we do something, make a plan?

To build a factory may taketwo, three years. To break even on the factory may take 10, 20 years. If you are not going to be here, can I make a deal? So I assess them.

Do you think they assess me?Of course! They will see what is happening. They will have their embassies here writing reports. And if you have different views in Singapore, embassies say, well, this PM makes very good speeches, but actually he has a lot of political problems at home.

When you meet them, you will be received with the courtesies, but I thinkthey are not carrying the same weight, and you will not be able to defend and advance Singapore’s interests in this state.

On the other hand, if they know you are on top of your situation at home, ifthey know you have strong support, good support, they know you are in touch with your population and you have got your domestic issues well under control, then they take you seriously.

Therefore, to be effective internationally, to be strong at all, you have to beunited domestically.

In anuncertain world, in Singapore, you have security, you have safety. That is why people want to put family offices here. That is why people want to deposit money here. That is why people have confidence and put factories worth billions of dollars here, which take 20, 30 years to pay back, because of Singapore being a safe haven.And one big part of that safe haven, one big factor, is stable politics, good politics.

I know that many Singaporeans want more opposition and if you ask why, they will say, well, we would like a stronger check and balance on the PAP. And I would say the opposition has a role to play in our democratic system. It is here to stay. Opposition MPs are never going to disappear from Parliament. I accept this.That is the way democracies work. We started in a very unusual position withalmost overwhelming PAP presence in Parliament, almost zero opposition. And now there is significant opposition, and I do not think that is ever going to change, and we will work with this.

But Singapore also needs an effective system of government which is led bya good and capable ruling party, and that depends on elections delivering outcomes which work for Singapore. And what are outcomes which work for Singapore? They are when, after the election, the country is able to generate a leadership which is capable, which is committed, which is honest, which can run a competent and efficient, effective government. Defend our place in the world and lead Singapore safely through crisis.

That is ultimately what elections are about; to choose who is to lead thecountry and to make sure that the team which can lead the country can do so well.

In fact, ideally the team which can lead the country most successfully and most effectively. And part of the system is you have the ruling party and you have the opposition party. You have ruling MPs and opposition MPs. But if voters keep on electing more opposition MPs, even when the government is doing a good job, then beyond a point, it must weaken the government’s ability to govern, to form the best possible team for Singapore and to run this country the way Singaporeans have come to expect. It must be so.

Some people say the civil service is marvellous,you do not need a good minister. Anybody can be the minister. The permanent secretary would do the work, you just sit there and say yes or no. It is like saying you do not need a good sec-gen; the unions are fine, sec-gen just sits there and says: “Everything is good”. Really? When you work in a company, is that how itworks?

If you see a company where the boss is doing that sort of thing, do youthink good people are still going to be in that company? Or they will say: “This place has no hope, better go and work for a better boss.”

To run a good team, you need a good leader. And if you do not have a good leader, a good team will melt away.And we need to have that kind of leadership, that kind of quality, in order for Singapore to perform and to succeed the way it deserves to.

Key lesson from past crisis

This evening’s has been a sober speech but I thought it was my duty to come,and talk to you directly, candidly, honestly, and share with you things as they are.

It is a lesson I learnt at the beginning of my political journey, when I first became a minister, and we were dealing with an economic recession, a severe recession in 1985 and we had to cut CPF, employer CPF by 15 percentage points.

Those of you old enough will remember what a shock and what a difficult decision that was. But we were able to carry it because the union members had confidence in their leaders at that time.

And therefore, whenever I am confronted with a crisis like this or asituation like this, my immediate instinct is to go: “Let’s talk, understand what isthis about. What can we do together? How to dig out of the hole, not dig yourself deeper and deeper.”

So, I think that we can go into battle with confidence. We have the resources, we have the experience – we are ready. We have done itbefore, and we will show the world that we can do it again.

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