No clarity yet on baseline or pharmaceutical tariffs with US: DPM Gan
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Deputy Prime Minister Gan Kim Yong said he has told US officials that Singapore would be keen to negotiate its baseline tariff rate if the opportunity arises.
PHOTO: LIANHE ZAOBAO
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SINGAPORE – The US government did not negotiate its tariffs on Singapore and did not want to commit on whether the 10 per cent baseline tax could rise or fall in the future, said Deputy Prime Minister Gan Kim Yong.
DPM Gan, who visited the US from July 20 to 26 pharmaceutical tariffs being contemplated
He told the SG60 IPS-SBF Conference on July 29 that these talks did not take place as he did not get the chance to meet Commerce Secretary Howard Lutnick. He did, however, meet other officials, including Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer. They discussed ways to keep up the long and mutually beneficial bilateral economic relationship, as well as potential collaboration in areas like the digital economy.
DPM Gan also met business leaders in New York, and congressional leaders handling trade issues in Washington. He also visited an ST Engineering aerostructures factory in Maryland.
The US administration was “not in the mood to discuss any discount to the baseline tariff”, DPM Gan said at a dialogue moderated by Mr David Rennie, The Economist’s geopolitics editor.
“We also wanted to know whether the baseline tariff will stay at 10 per cent 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. So we just have to wait and see.”
DPM Gan, who is also Minister for Trade and Industry, said he has told US officials that Singapore would be keen to negotiate its baseline tariff rate if the opportunity arises.
Pharmaceuticals and semiconductors, which are key exports from Singapore to the US, are currently exempt from baseline tariffs. But US President Donald Trump had earlier in 2025 threatened to end an exemption for pharmaceutical imports, saying tariffs would be imposed “at a level that you haven’t really seen before”. The US is a major market for Singapore-based drugmakers including American multinationals like Pfizer and Johnson & Johnson.
DPM Gan said official-level discussions between Singapore and the US Department of Commerce, which commenced before his trip, are still ongoing. “I can’t go into detail because negotiation is ongoing and there’s a bit of a confidentiality we need to maintain on both sides,” he said when asked what the US was looking to secure through these talks.
He added that the US generally had concerns about what the country experienced during the Covid-19 pandemic, when supplies of critical pharmaceuticals were disrupted.
“They want to make sure that they have a secure supply line of pharmaceuticals. They do want to see whether they can onshore this production, so that they can produce (it) themselves. But they also know that it’s not possible to onshore everything, because some of the raw materials are actually (from) outside of America,” he said.
“They do need to think about how they can work with partners, trusted partners, to make sure that their supply chain is secure and reliable. So that is what they are looking for in their partners, including Singapore,” he added.
“I think the administration’s focus now is to finish the negotiation of reciprocal tariffs. Then it will start to engage countries on specific sectoral tariffs in pharmaceuticals and semiconductors.”
DPM Gan said Singapore has yet to engage the US on the prospect of semiconductor tariffs
Speaking at the same conference earlier in the day, Prime Minister Lawrence Wong said Singapore’s trade and investment relationship with America, even with the tariffs, remains important.
“We would prefer to have zero tariffs of course, but if it is the baseline rate, then we are at the lowest category. We can live with it, and we can still do business and there will still be many opportunities for trade with the US, because whatever is happening in America now, the economy is still resilient, and there is still tremendous innovation happening in American companies, and so there will still be opportunities there,” he said.
DPM Gan in his dialogue said the US economy continues to be relatively resilient. He said that based on the feedback from US businessmen he met on his trip, the outlook for the US economy seems cautiously optimistic, adding that Mr Trump’s One Big Beautiful Bill
The US was Singapore’s second-largest trading partner in 2024, while Singapore was its 16th-largest trading partner. Singapore was also the third-largest Asian investor in the US.
More than 250 Singapore companies operate across 45 states, supporting around 350,000 jobs in the US, according to the Republic’s Ministry of Trade and Industry.
The US also has a longstanding trade surplus and free trade agreement with Singapore.
The recent deals between the US and several countries, as well as the European Union economic bloc, are good news, DPM Gan said.
“This gives us a sense that there’s good progress in the tariff negotiation. But I also come back with the sense that there remains significant uncertainty. I‘m not sure whether the uncertainty has really been eliminated or even reduced,” he added.
He cited the lack of clarity on the rules of origin that will be used to determine where products originate from. He also said it is unclear how reciprocal tariffs will be implemented, and how components from different countries and transshipped goods will be assessed.
This comes on top of the uncertainty around sectoral tariffs, which are yet to be determined.
There is also uncertainty about whether the investments that countries have pledged to the US under tariff deals are new contributions, or money that is currently invested in another country, DPM Gan said.
“For example, the EU has committed to make an investment... over a period of time. Japan has also committed investments into the US. Japan has been a major investor in Singapore. Whether the Japanese investment in Singapore will be diverted to the US is a question that is yet to be seen,” he said.
“There are (also) uncertainties as to how countries will respond to the outcome of the tariff negotiation. Some countries have also committed to purchase more from the US, and they would have been purchasing these products from other countries. Whether now, instead of purchasing from country A, country B, they will now purchase from the US, and therefore exports from these countries to affected countries will be changed,” he added.
“I think these uncertainties (are) second derivative uncertainties. No one is paying much attention yet, because we need to have a tariff settled, then we work out how the secondary impact would be.”
Global supply chains will also be restructured if countries move their investments from destinations facing higher US tariffs to those facing lower tariffs, he said.
“The overall global trading system, what we call the rules-based multilateral trading system, that we depend on rules, respecting trade agreements with one another, and not change at will, is something that has been challenged,” DPM Gan said.
“Today, we can agree with one another on a certain tariff, but tomorrow, something happens. We start to change our tariff rate, and that is something that is very uncertain, and that has been seen over the last few months.”
