Read the full transcript of Singapore Senior Minister Lee Hsien Loong’s speech on Trump’s tariffs: “Biggest shock the global trading system has ever faced” on Monday, April 14, 2025.
The Liberation Day Shock
LEE HSIEN LOONG: When Liberation Day came, not the May 1 but the April 2, that was not a complete surprise to us because Trump had signaled very clearly and over many years that he wanted to do tariffs and he wanted to equalize America’s trade deficit. He believes in tariffs since he was a young man. He had said during this campaign repeatedly that he comes in, he is going to put tariffs on everybody—it’s “the most beautiful word in the vocabulary.” And the first time he was president, eight, nine years ago, he had imposed some tariffs so that he was going to do something was not a surprise. But even then, what happened in the Liberation Day was more drastic than expected.
In fact, it is the biggest shock which the global trading system has ever faced. The stock markets plunged. I think even the bond markets moved in America. Interest rates went up, bond prices came down. And so for now, there is a 90-day postponement on what some call the reciprocal tariffs.
And he has put in some exclusions for Chinese smartphones, laptops, chips. And so for the time being, there is a reprieve. But tariffs on all the countries, 10%, that’s non-negotiable and that’s enforced and happened already. So postponing 90 days sounds like you’ve got 90 days of reprieve, but actually during these 90 days is not just the tariffs which have been postponed because with this thing hanging over you, waiting not sure whether it’s going to come or not come, everything else goes into limbo. Because what happens after 90 days?
America’s Trade Objectives
We know that what the US administration wants is they want to eliminate the US trade deficit, they want to rebuild manufacturing in the US, bring the jobs back and they want to do this not only across the board to balance with the whole world but they want to do this country by country, with China, with Japan, with Canada, with Mexico, with Vietnam, not with Singapore.
If America had a deficit with Singapore, we would be there high on the list too. It’s the way they are thinking about their problems. So this is a fundamental belief, a very deep motivation. Trump believes it. His team believes it, many of them.
And these are goals which are going to be very difficult to achieve. So we must expect him to continue to pursue this objective and when he makes moves and the moves have not delivered results, I think the conclusion will not be to leave off but will be to continue to do more moves and to take further strong measures. So we can expect to see more further steps taken by the Americans over time and that is going to have very major consequences for many countries, including Singapore. So we are here now, steps taken, steps yet to come, more uncertainties to come. We are not where we were before this new administration took office or before the April 2. The world is in a new phase.
US-China Relations Damaged
One of the biggest problems in trade and arising from this tariff package is the damage to US-China relations. America has postponed the tariffs against other countries but not postponed against China. The tariff war between America and China has already begun. First round, America put 20% on, China responded with selected products, then America came back again, China went back and forth, now US levies on China 145%. And the Chinese, “you do this to me, I do this to you,” the Chinese do it to US imports, US sales to China 125%.
So it’s reached the level where the number doesn’t matter anymore. It can be 100, it can be 200, it can be 300. How much business is going to be done? Probably almost none because it’s impossible. And it does not stop with such tariff items.
It goes beyond tariffs. So for example, China has restricted rare earth exports. And what are rare earths? They are raw material which you need to make all kinds of electronics equipment. And China is a major exporter, if you don’t get it from China, it’s very difficult to get from other places.
So China says, “you do this to me, well, I will respond. I will restrict rare earth exports. And you don’t want me to sell you goods? Okay. I will not buy your goods” is one thing, but “I will also restrict imports of Hollywood films.”
Films are not goods because films you just stream over, you can watch its services. But never mind, “I will restrict that. I won’t watch Disney, I will watch Neja too.” Effectively, the bilateral trade is going to get killed. And why?
Because the businesses just cannot do it. If the tariff is 5%, 10%, maybe even 15%, okay. I am selling to you, let’s “cham siong.” You take five, I take 10, we squeeze our belts a little bit, my profit a bit less, your cost a bit higher, okay let’s carry on and try to stay calm and carry on. But when it is 150%, 200% and you don’t know what’s going to happen tomorrow or day after, then you cannot stay calm and carry on.
You must stay calm and then you may have to decide to go into a different business or to go out of business. And that means entire businesses and trade flows are going to stop. And it won’t end with trade because if I am quarreling with you on such a serious matter, it is very difficult for me to cooperate with you on other equally serious things. So for example, the Americans want China to cooperate with them on restricting fentanyl because the materials to make fentanyl come from China, somehow they go to Mexico and other places, they become made into fentanyl then smuggled into the US. And America wants China to stop making the precursor chemicals.
But China says, “well, why should I try very hard?” So this is going to escalate and there will be far reaching consequences for US-China relations. This is not a new problem actually. It is not a problem which started with this President. It is a problem which has been growing since quite a number of years.
A Fundamental Contradiction
The attitudes change when Obama became president. Over time, they harden. So it’s Democrats as well as Republicans. We say that the Americans are divided but on China, the Americans are united. Strong consensus that China is a “pacing challenge.”
And they have to take China very seriously and actually they are trying very hard to stay ahead of China and to prevent China from overtaking them. At the same time, the Chinese say, “I am growing, I am developing, I want to take my rightful place in the world. Who is going to stop me?” So this is a fundamental contradiction. The Americans say, “I want to make sure that you do not overtake me.”
The Chinese say, “I have a right to develop.” So we can talk about win-win but when you cast it like that, there is a fundamental contradiction and it is not going to be easily resolved. So the latest trade war has worsened it and is going to be a serious problem for the two countries and also for the world. So what do we do about it? Some people say don’t get excited.
What Makes This Crisis Different
Don’t overblow the issue. We’ve weathered bigger storms before. We haven’t failed. So we should take these events in our own stride. And it’s true, we shouldn’t get excited.
We should take it in our own stride. But we do need to be concerned and to understand what is happening and what this means for us. Because this time, something important is different. We’ve gone through many crises before over the years. I mean, we’ve gone through global financial crisis, before that Asian financial crisis, we had SARS, most recently we have had COVID and from every now and again, something happens in the world, we are carried along and we have to batten down our hatches and see it through.
And every time we have succeeded, so we have confidence. But one important thing which you must understand is that every time that happened, we had one big two big things going in our favor. 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. But two, every time we got into trouble last time, Singapore was part of a working global economic system, trading system. And that trading system promoted free flow of trade, free flow of investments, 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. So every time we run into trouble, you come out, you plug in, you grow again.
Next time trouble, you come out, the system is still there. It’s a global financial system, the WTO system. And that was what helped us. What was it about that system which helped us? It gave countries big and small a level playing field.
The Level Playing Field Under Threat
So whether you are a big country or a small country, under the WTO system, the rules are the same. Your access is the same. What do I mean? Let’s say between countries, we trade, right? Sometimes you have tariffs, sometimes you have other restrictions.
You are allowed to do that. But you may not discriminate between your partners, big ones and small ones. Let’s say take an example. If the EU raises tariffs on cars from Japan, and you want to protect European cars, you raise tariffs on, let’s say, 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 tariff. On the other hand, if you give a concession to a country, for example, if Australia says “I will allow rice from India to be sold duty free,” then they have to do the same for rice from all other countries—Japanese rice, Chinese rice, Vietnamese rice, American rice. Everybody has to come in also duty free. It has to be a level playing field. You can protect yourself, but you can’t discriminate between your partners.
And that is called MFN, Most Favoured Nation. It sounds, if you are MFN, that you have got some special favour. Most favoured, right? But actually, most favoured just means equal favour, means you don’t get more than anybody else and you don’t get less than anybody else. And it’s a level playing field for countries big and small.
But what it means is that for small countries who have very little bargaining power because the rules are like that, so we enjoy the same market access which big countries enjoy. And we benefit from the bargaining power of bigger countries. And therefore, we can get access and therefore we can get investments and therefore we can get jobs. So MFN is critical to Singapore. What is different this time is that the US doesn’t want MFN.
From MFN to Reciprocal Tariffs
They want to dismantle the system. They want to replace MFN with reciprocal tariffs. Meaning not, “I won’t treat everybody equally, I want to treat each partner one on one. I deal with you, you deal with me. What you give me, I give you,” at least in principle.
When you bargain, of course, “what you give me what I give you, I would like you to give me a little bit more,” but deal one on one. And therefore exploit America’s bargaining power. Because they are big, one quarter of the world GDP, one seventh of total goods trade in the world. Why treat everybody equally? They don’t have the cards, to borrow some famous words.
“Why not we treat this one on one, like arm wrestling? Let’s see who’s got more biceps, who’s got a stronger arm, and we’ll see who’s stronger. We’ll get more that way.” So it’s a fundamentally different kind of world which the US is looking for and pushing for. And the approach is not win-win, but win-lose.
In other words, the US wants to do well for themselves. They really don’t mind whether you the other countries do well for themselves or not. And President Trump recently is on record saying, “if we can make a really fair deal and a good deal for the United States, not a good deal for the others, this is America First. It’s now America First.” So this has very major implications for Singapore, very major implications for the world.
Implications for the World and Singapore
What does it mean for the world? Firstly, you are going to have different rules for different countries. Small countries will suffer because we 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. Secondly, the tariffs, whether they are equal or whether they are unequal, and in this case they will become unequal, will choke off trade, will raise costs and will dampen growth.
In 2000, at the beginning of the millennium, the US tariffs were on average about 1%. So basically, if you can sell to the US, your goods can enter the US almost duty free, 1%.
There are some exceptions like trucks, they charge a lot. Other things like sugar, where they are restricted, they are sensitive, they got farmers to protect ethanol. But across the board, 1%. They were the anchor of the global trading system. Now already they are at about 10%, that’s a level which has not been there for 80 years.
The Impact of US Tariffs on Global Trade
It’s very high. It’s higher than any other developed country. And if in ninety days’ time, the rest of the tariffs come in, reciprocal tariffs, and they go to 30%, 40%, sometimes nearly 50%, 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 may worsen the depression for the US and for the world. Furthermore, this is not the end of the story because tariffs on the bundle so far has not counted two products, pharma and semiconductors. And pharma and semiconductors may have been feeling happy for a short while, but America has made very clear that coming soon, “Akan Datang.”
And that will potentially hit Singapore quite hard because pharma and semiconductors are a significant part of our economy. So that’s 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 there will be a downward spiral and the impact will be even worse.
International Retaliation
Canada has already retaliated. The EU has also retaliated quite carefully because they are a bit fearful. They have done Harley Davidsons because that is one of the iconic American products and built somewhere in Georgia, I am not sure. In the Southeast where it is Trump country, but they have not put high tariffs on whiskey, bourbon. Why?
Because the Americans say, “You do bourbon, I am going to hit French wine, German wine, champagne.” So both sides have held off for now, they can drink to that. But that is a small item. As the quarrel goes on, it will go bigger and the impact will be worse and the Chinese side has gone right to the end and with other countries, you can head in that direction too and that will do a lot of harm.
Disruption Beyond Economic Slowdown
Fourthly, when you have tariffs and we say well that is going to dampen growth and things are going to slow down and there will be fewer upsides.
It’s not just dampening growth, it’s going to be very disruptive. If dampened growth means volumes go down, profits go down, maybe bonuses go down. Overtime is less. Okay, well I tightened my belts, I still got my job. Most of us.
And maybe over time, I can go and find another job. But if the supply chain is disrupted, if you get hit with 100% tariffs, companies in China are making Christmas trees for America for Christmas. One hundred and fifty percent tariff, Christmas is not going to come. If you’ve got such a tariff on pharmaceuticals or semiconductors in Singapore, are we going to have Christmas or not?
So what it means is that industries can be disrupted, business can be totally turned upside down, you may have the whole business model suddenly disappear.
And not just not hiring more people, but you may find yourself all of a sudden a lot of surplus workers wondering how to look after them. And that can very quickly lead to recessions, recession in the US itself, and impact elsewhere too. So this is going to be a burden on businesses, on consumers, on the global economy.
Long-Term Implications
Fifthly, with all these new tariffs, this is something which is going to last a very long time. It’s not going to go away soon.
Because once you put in a tariff, once you protect your market, it’s very difficult to take it away. People get used to it. Some company may invest. You put in a tariff, you say, come and invest in America. So I invest in America.
It’s really not competitive. You want to build Christmas trees in the US is very expensive. Where to find workers? But after you have got the tariff and after the Christmas tree factory has come up, then you want to undo it. The factory says, “I’m going to die. Please help me.” So you can’t undo it anymore. It is there. It’s a reality.
And furthermore, if you undo it, then the party in opposition will say, “But you see, the Chinese have their tariffs still on. Why am I disarming myself? You have to negotiate with them.” Further, long process. To go from where the Americans were before the war, when they had high tariffs, to where they were by February when the tariffs were 1%, nearly zero, that was a nearly eighty year business process gradually bringing things down.
So now if the tariffs go up, they stay up for a while, if we want to bring them back down, I think that’s going to be a long process. It is not going to disappear. So that is going to be a long problem.
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