What this lesson teaches
I can explain how globalisation brings countries both economic growth and economic vulnerability.
Syllabus K336, Issue 3, Guiding Question 2, Economic impacts of globalisation. Economic growth and economic vulnerability experienced by countries
Make a guess
In April 2025, the United States set a 10% tariff on Singapore, lower than on many neighbours. Do you think the trade war left Singapore unaffected?
- Yes, because Singapore's own tariff was lower than its neighbours'.
- Yes, because Singapore does not trade with the United States.
- No, slower trade between big economies hurts Singapore too.
Show the answer
No, slower trade between big economies hurts Singapore too.
Singapore's trade is over three times its GDP. When the US and China raised tariffs on each other, MTI cut its growth forecast.
When big economies raise tariffs on each other, a trading country like Singapore feels it through slower growth, even if its own tariff is low.
A tariff is a tax on imported goods. It makes foreign goods more expensive, so people buy fewer of them. Countries sometimes raise tariffs to protect their own industries or to pressure another country.
On 2 April 2025, the United States announced new "reciprocal" tariffs on many countries. Singapore was given the baseline rate of 10%, lower than many neighbours. But the United States and China also raised tariffs sharply on each other.
Singapore's trade is worth over three times its GDP, so it depends on trade between other countries too. On 14 April 2025, the Ministry of Trade and Industry cut its 2025 growth forecast to between 0% and 2%, down from 1% to 3%, because of the tariff war.
This shows economic vulnerability: decisions made in other countries can slow Singapore's growth, affect firms' orders and put jobs at risk. It also shows why Singapore works to keep trade open, for example through free trade agreements.
- Tariff
- A tax on imported goods.
- April 2025
- US "reciprocal" tariffs (10% on Singapore); MTI cut the 2025 growth forecast to 0% to 2%.
Real examples to use
US tariffs, April 2025
On 2 April 2025 the United States announced new tariffs, with a 10% baseline on goods from Singapore. Use it for how decisions by big economies affect Singapore.
MTI growth forecast cut, April 2025
On 14 April 2025 the Ministry of Trade and Industry cut Singapore's 2025 growth forecast to 0% to 2%, citing slower global trade. Use it for economic vulnerability in a trading economy.
Worked example: Using this briefing in an answer
A Question 7 asks whether economic growth or economic vulnerability is the more significant effect of globalisation on Singapore.
- Vulnerability: in April 2025, US tariffs and a US-China tariff war led Singapore to cut its growth forecast to 0% to 2%.
- Explain the chain: when big economies trade less with each other, Singapore's ports, factories and service firms get fewer orders, which puts jobs at risk.
- Growth: openness to trade is also what made Singapore prosperous over decades.
- Weigh: the shock shows that vulnerability is real, but Singapore cannot stop trading, so it manages the risk rather than closing up.
Watch out for this
Singapore only got a 10% tariff, so the trade war does not affect it.
Singapore trades so much that a slowdown in trade between big economies hurts it too, which is why its growth forecast was cut.
Check your understanding
Why can a US-China tariff war hurt Singapore's economy?
- Singapore has to pay part of the tariffs the two countries charge.
- Singapore relies heavily on trade between other countries.
- Tariffs make goods from China cheaper in Singapore's shops.
Show the answer
Singapore relies heavily on trade between other countries.
Right. Less trade between big economies means fewer orders for Singapore's firms and ports.