Singapore Minister: Global Trade Won’t Revert Post-Tariffs

Senior Minister Lee Hsien Loong Cautions Against Return to Pre-Tariff Era

The global economic landscape has permanently shifted, and a return to the pre-tariff status quo is highly improbable, according to Singapore’s Senior Minister Lee Hsien Loong. The impacts of such trade policy decisions are long-lasting, he stated.

Tariffs Create New Dependencies

In a wide-ranging dialogue hosted by the Economic Society of Singapore, Mr. Lee explained that once tariffs are implemented, they generate new economic realities. Businesses emerge that rely on this protection. Reversing such policies would be politically unfeasible, he asserted.

“When you first put in the tariffs, everybody complains,” Mr. Lee observed. He highlighted how industries needing specific materials, like steel, face increased costs, while those producing items like chips find their access to markets, such as China, restricted.

“But once you have put in the tariffs, and once new players come who depend on the tariffs and need the tariff protection, and you say ‘I’m taking the tariffs away, we’re going back to where we were’, it’s politically not possible,” he elaborated.

Singapore Navigates Trade Tensions

Responding to a question about Singapore’s current economic standing amidst these changes, Mr. Lee invoked a Chinese idiom. He suggested that even nations that have made significant concessions might find comfort in comparing their situation to those who have suffered greater impacts.

Despite having a free trade agreement with the United States, Singapore faces a 10 percent tariff. Mr. Lee expressed hope that this rate would remain the best possible outcome for the nation.

Climate Action and Free-Rider Risks

The Senior Minister also drew parallels to the US withdrawal from the Paris climate agreement. From an economic standpoint, climate is a shared resource, making global warming a complex challenge that requires collective action. However, this collaborative approach carries the inherent risk of “free riders” who benefit from others’ efforts without contributing.

“And whether or not one big country opts out from the Paris agreement, we have the risk of a free rider,” Mr. Lee stated.

He urged like-minded nations to continue with sensible actions, even if one major player withdraws. Disagreements among even cooperative countries regarding emission reduction rules are also a concern, he noted.

Some Southeast Asian nations have indicated a need to re-evaluate their commitments if the US adopts protectionist stances. Singapore is committed to being a responsible global citizen, ensuring it is not perceived as a free rider.

The International Energy Agency reported that renewable energy capacity additions in 2023 increased by 50%, reaching nearly 510 gigawatts globally (IEA 2024). This illustrates ongoing efforts despite geopolitical complexities.

A World Temporarily Minus One

On the future global economic framework, Mr. Lee proposed a concept he termed “the world temporarily minus one.” This signifies a scenario where the established global order largely persists, but with one significant nation needing to engage with the rest of the world.

“But, well, for the time being, you wish the rules were different, and you are trying your best to change it. Temporarily, meaning maybe at some point you can come back and participate again in a more open and constructive way,” Mr. Lee concluded.