1. Thank you very much. I just want to say a few words. First, I want to thank you for inviting me to speak at this conference, to have a chance to speak to you. Other than answering difficult questions, I would also like to hear your views on the issues that are close to your heart.

 

2. I have just come back from the US, stopping over in Osaka to visit the Singapore Pavilion at the [World] Expo. And I would like to make a pitch for the Expo Pavilion. If you have the time, if you are in Japan, do drop in by Osaka and pay a visit to our Pavilion. It is outstanding, it is red in colour, a little sphere – a Little Red Dot, we call it. I think it represents Singapore very well. I assure you [that you will have] a very enjoyable experience. 

 

3. The Prime Minister spoke this morning, and all of you have heard his speech. I think we talked about a world that we are facing that’s increasingly becoming uncertain and full of challenges and difficulties moving forward – and a lot of variability. It is something that we are confronted with. At the same time, we are also strengthening Singapore’s value proposition to the world by being a trusted, reliable partner. We will continue to work with like-minded countries to move forward [on] our economic agenda.

 

4. As I said, I have just come back from the US. To give you a very quick update of my discussions in the US. I went there with four key objectives: first, to have first-hand information, an assessment of the economy – how it is going, where it is moving towards, what is the outlook like; second, to meet up with various Congressmen from both Parties, to engage them, and to share with them about Singapore; third, to meet up with the Administration to discuss areas of collaboration and how we can deepen our cooperation to create more opportunities for us; and lastly, to also discuss issues relating to the tariffs.

 

5. On the first issue of the economy, it is surprising that the US economy continues to be relatively resilient. When I met many businessmen in the US, as well as academics, the feedback I got is that the economic outlook seems cautiously optimistic – maybe because of the “Big, Beautiful Bill” that President Trump has just passed, which has entrenched tax cuts and benefits and support for businesses. So the outlook seems to be quite optimistic, albeit cautiously so.

 

6. At the same time, inflation seems to be muted. One of the reasons may be because the full impact of tariffs has not flowed through yet, so they are still waiting to see whether costs will go up in the second half of the year. But so far, inflation seems to be moderated. I think this is reasonably good news for the economy. And the unemployment rate is also stable, and has not spiked up. So I think overall, most of the American businesses are cautiously optimistic about the future.

 

7. Secondly, when I met the Congressmen – several of them from both Parties – I tried to impress on them the good relationship that Singapore has with the US, the long-term and deep engagement that we have. Particularly, the US has a trade surplus with Singapore, unlike many other countries. We are also keen to continue to explore how we can work together with the US, and we hope the Congressmen will continue to support Singapore’s engagement with the US.

 

8. When I met the US Administration, we also talked about cooperation between the two countries, beyond tariffs, and beyond just investment and trade. We also discussed cooperation in the digital economy, climate change and sustainability – the green economy – and how we can continue to work together in many of these areas that have potential for growth. I also encouraged them to continue to engage Asia, not just Singapore, but the larger Asia. Because ASEAN, for example, is a fast-growing region and a very important economic region for the US. So I encouraged them to continue to engage with us and to find ways to work together between US and Singapore, and between US and ASEAN.

 

9. And lastly, on tariffs. We discussed the tariffs that the US has introduced since Liberation Day in April. And Singapore is subject to the minimum baseline tariff of 10%. My first question to them was: can we negotiate on the 10%? Can we try to reduce it or eliminate it? I think the answer, for the time being, was quite obvious. They are not in the mood to discuss any discount to the baseline tariff. But we also want to put a place marker to remind the US that at any point in time in the future, if there is flexibility to discuss the baseline tariff, we are interested in negotiating. So we just want to register our interest [in this]. 

 

10. At the same time, when we discussed with them, I think the US has mentioned several times that the baseline tariff may be adjusted going forward. So we also wanted to know whether the baseline tariff will stay at 10%, or will it be higher or lower. The answer was non-committal. They are still reviewing the tariff, and in time to come, they will make the appropriate announcement. We [will] just have to wait and see. I think there is significant uncertainty.

 

11. I did not have a chance to meet Secretary Lutnick, and therefore we did not go into the details of negotiations on the pharmaceutical tariffs. I think the Administration’s focus now is to finish the negotiation on reciprocal tariffs. After that, they will start to engage countries on specific sectoral tariffs, such as pharmaceuticals or semiconductors. 

 

12. I think that, in a nutshell, is what I have engaged the US to discuss on. Generally, we continue to have a very good working relationship between the US and Singapore. We are happy to see that the US has completed negotiations with several countries and economic groups, including the EU. This gives us a sense that there is good progress in tariff negotiations.

 

13. But I also come back with a sense that there remains significant uncertainty. I am not sure whether the uncertainty has really been eliminated or even reduced. Say, for example, despite the fact that they have completed negotiations with several countries, the details are not yet fully discussed or disclosed. And how, for example, the definition of rules of origin – how to determine the rules of origin, the details are not out yet, and how to implement some of these tariffs because it is very complicated to have different tariffs with different countries. And how do you deal with inter-country transfers, transshipment, re-exports, re-manufacturing, and value-added manufacturing and so on; how do you account for the contribution, the components from the different countries? The details have not been worked out, both in terms of definition as well as implementation.

 

14. On top of that, there is also uncertainty as to the sectoral tariffs, which have not yet been determined. The baseline tariff, as I mentioned, whether it will stay at 10% or be higher, is something that remains to be seen. 

 

15. Beyond the tariff discussion, there is also the question of how countries will respond as a result of the tariff negotiations. Let’s say, for example, the EU has committed to making an investment of €550 billion over a period of time. Whether this investment will be new investment, or whether it will be diverted from investments into other countries, is a question that we do not know yet. Japan has also committed investments into the US. And Japan has been a major investor in Singapore. Whether the Japanese investment in Singapore will be diverted into the US is a second question that is yet to be seen. So there are uncertainties in how countries will respond to the outcome of the tariff negotiations.

 

16. Some countries have also committed to purchasing more from the US. They would have been purchasing these products from other countries. Instead of purchasing from Country A or Country B, they will now purchase from the US, and therefore exports from these countries to the affected countries will be changed. I think these are second-derivative uncertainties that no one is paying much attention to yet, because we need to have the tariffs settled, before we work out what the secondary impact will be.

 

17. And then, in the medium to longer term, there is also the issue of how the supply chain will be restructured. If companies who have investments in high-tariff countries may decide to move investments, to relocate their manufacturing plants to a lower-tariff country, so as to benefit from the lower tariffs imposed by the US, this will result in a shift in supply chains, and this shift is another uncertainty that we have yet to see. The economics will have to be worked out based on the relative tariffs of different countries.

 

18. But in the longer term, the concern and uncertainty we are facing, really, is how this will impact the overall global trading system, or what we call the rules-based multilateral trading system – one that depends on the rules, respecting trade agreements with one another, and not to change [these rules] at will. It is something that has been challenged. Today, we agree with one another on a certain tariff. Tomorrow, something happens, I will decide to change the tariff rate I imposed on you. That is something very uncertain, and that has been seen over the last few months as you see tariffs being negotiated. We have a minimum baseline tariff of 10%, and it is at risk of being adjusted going forward. Whether that will be the final tariff, no one can tell. So the uncertainty, in fact, over the last few months has been raised. It is something that we need to recognise, and to adjust ourselves and to respond to it. 

 

19. Thank you very much.