Introduction

SINGAPORE – The Central Asian nation is facing uncertain times as Donald Trump prepares for his second term as President of the United States. Veteran diplomats gathered at the UOB Global Markets Economic Forum on January 14, where they expressed concerns about the potential ramifications of Trump's policies on Singapore and its regional neighbors.

Concerns About Trump's Policies

Professor Chan Heng Chee, Singapore's ambassador-at-large at the Ministry of Foreign Affairs, highlighted the unpredictable nature of Trump, noting that the US remains the world's largest economy and military power. "Mr. Trump thrives on unpredictability, using it as a tactical advantage," she remarked.

With Trump threatening to impose sweeping tariffs, particularly targeting China with rates that could soar to 60%, there’s significant anxiety about how these measures may backfire on ASEAN members, including Singapore and particularly Vietnam. The shift of supply chains from China to other Southeast Asian nations has attracted US scrutiny, leading many to speculate about incoming tariffs that could target these nations in the name of national security.

Potential Collateral Damage

Prof Chan cautioned that while Singapore might not be explicitly targeted, it could become "collateral damage" due to the overall economic fallout these tariffs might create. The interconnectedness of global markets means that changes in US policy will ripple through, impacting the entire region.

A Level-Headed Approach

Amid these concerns, Prof Chan advises a level-headed approach, stressing that while Europe is grappling with anxiety over Trump’s return, the Asian region appears to exhibit a more resilient outlook. Furthermore, she addressed fears of a US-China war, asserting that Trump is "not a man of war," referencing his previous term where military engagements did not escalate.

Concerns Over Taiwan

However, she voiced apprehension specifically regarding Taiwan, pointing out that the handling of cross-strait issues in the future remains a concern. As the new administration begins, Trump appears more organized and ready for his second term, with a "moderate" economic team already in place.

Cautious Optimism for China's Economy

Regarding China’s economic outlook, Prof Chan expressed a cautious optimism, believing in the inevitability of recovery for the world's second-largest economy. Nonetheless, lingering issues regarding policymakers' confidence have resulted in a strained economic environment.

Dialogue Between Trump and Xi Jinping

Moreover, the dialogue between Trump and President Xi Jinping might not lead to a reflective "grand bargain," according to Prof Chan, as deeper structural issues and power dynamics persist. "While personal gestures of goodwill exist, the underlying tension remains," she warned.

Five Forecasts for 2025

The forum also hosted former ambassador Tommy Koh, who articulated five forecasts for 2025, including the assertion that war between the US and China is unlikely, backed by Trump's history of aversion to military conflict. Koh raised concerns about the harmful effects of protectionist stance on global trade and reaffirmed Singapore's commitment to seeking exemptions based on its Free Trade Agreement with the US.

Singapore's Strategic Position

As global tensions rise, Singapore's strategic position as a host to significant US military bases and as a past venue for high-stakes diplomacy, like the North Korea-US summit, only adds to its complex relationship with US policies.

ASEAN Economies and Climate Concerns

Amidst uncertainty, Koh also projected robust growth for ASEAN economies, which are expected to flourish and potentially outpace Germany to become the world's fourth-largest economy. However, the upcoming withdrawal of the US from the Paris Climate Agreement alarms many, but Koh maintains that such a setback won’t be "fatal" for the global climate agenda.

Conclusion

In this unpredictable climate, the message is clear: Singapore, like many nations in the region, must navigate the choppy waters as Trump 2.0 looms on the horizon. Are we witnessing the dawn of a new economic landscape, or will Singapore remain steadfast as an economic beacon in turbulent waters? Stay tuned.