https://www.straitstimes.com/opinion/the-market-will-survive-trump-says-economist-whos-seen-it-all

This is a fascinating interview with Dr Khor Hoe Ee, a veteran economist with decades of experience at the IMF, MAS, and AMRO. His perspective on current global economic challenges is particularly valuable given his hands-on experience with major crises over the past four decades.

Key Takeaways from Dr Khor’s Analysis

On Trump’s Trade Policies: Dr Khor maintains a relatively calm stance, viewing Trump as “a bit of an aberration” and emphasizing that “the market is bigger than Trump.” He believes the global trading system will survive the tariff shock, though it will require regional reconfiguration. His reasoning is pragmatic – the US still needs to import over $3 trillion worth of goods, and maintaining tariff barriers will eventually make America uncompetitive.

US Economic Outlook: Perhaps most striking is his prediction of a deep US recession, coupled with his observation about the declining “exorbitant privilege” of the US dollar. He notes that US Treasury yields and the dollar are now moving independently – a historically unusual behaviour that signals weakening confidence. With US debt potentially reaching 135% of the country’s GDP, he sees the US increasingly resembling an emerging market economy.

The Real Shock: AI, Not Trade Dr Khor offers a thought-provoking perspective that the bigger disruption won’t come from Chinese overcapacity but from artificial intelligence and automation. He warns of re-industrialization without labour, as China rapidly automates its industries, creating unemployment challenges even within China itself.

Asian Resilience: Having been deeply involved in addressing the 1997-98 Asian Financial Crisis, Dr Khor notes that Asia is now much better prepared. The region has improved its macroeconomic management and established swift liquidity support mechanisms, such as the Chiang Mai Initiative.

Singapore’s Position: Regarding Singapore specifically, he views the strong Singapore dollar as manageable, given the labour market and growing financial sector, although he acknowledges that some sectors, such as retail, are affected.

Dr Khor’s analysis is particularly valuable because it comes from someone who has been “in the thick of action” during multiple global crises. His relatively sanguine view of current challenges, while acknowledging real disruptions ahead, suggests that global economic systems have proven more resilient than many fear.

The interview offers a refreshing long-term perspective on what can often feel like an overwhelming current state of affairs, reminding us that economies and markets have survived many previous shocks and adapted accordingly. Retry

Dr Khor’s Rationale for Market Survival

Dr Khor’s confidence that global markets will survive Trump rests on several key structural arguments:

Economic Pragmatism Over Politics

Dr Khor views Trump as “a bit of an aberration” rather than a fundamental shift in global economics. His core thesis is simple yet powerful: economic necessity will ultimately prevail over political posturing. The US cannot simply stop importing goods worth over $3 trillion – it must source them from somewhere, even if trade patterns shift.

He observes Trump’s pragmatism when “cornered,” suggesting the President will moderate positions when economic reality bites. This isn’t ideological – it’s based on Dr Khor’s decades of watching politicians face economic constraints.

Structural Market Forces

Three key structural factors underpin his optimism:

1. Scale Reality: The US now accounts for only 15% of global trade, down from significantly higher historical levels. The world is less dependent on the United States than commonly perceived.
2. Competitive Advantage Logic: As long as other countries maintain the multilateral trading system, the US risks becoming “an outcast” and “uncompetitive” if it maintains barriers long-term.
3. Self-Correcting Mechanisms: Dr Khor believes Trump’s policies will backfire – widening the US deficit, damaging America’s credit rating, and weakening the dollar’s privileged position.

Historical Perspective

Having navigated the Latin American debt crisis, the 1997-98 Asian Financial Crisis, and the 2008 global financial crisis, Dr Khor brings a crucial long-term perspective, as countries have faced much more severe systemic shocks. Trump’s tariffs are “disruptive but not systemic.”

Impact on Singapore: Nuanced Benefits

Currency Advantage

Dr Khor identifies a counterintuitive benefit: the US dollar’s weakness due to Trump’s policies is actually helping Singapore. As confidence in the dollar erodes (evidenced by treasury yields and dollar movements decoupling), the Singdollar strengthens relative to other currencies.

This creates policy space, allowing countries like Indonesia to cut interest rates without currency pressure, while Singapore gains competitive advantages in specific sectors.

Sectoral Winners and Losers

Dr Khor acknowledges the Singdollar’s strength (1.28 to USD at interview time) creates challenges:

• Losers: Retail and certain manufacturing sectors lose competitiveness
• Winners: Financial services benefit from Singapore’s role as a regional hub during global uncertainty

His key insight is that Singapore has consciously accepted this trade-off. The economy can “absorb this strength” due to tight labour markets and financial sector growth.

Strategic Positioning

Singapore demonstrates an adaptive strategy through:

1. Regional Integration: Supporting Johor’s special economic zone as a cheaper manufacturing alternative
2. Economic Evolution: Manufacturing maintained 20% of GDP (better than the projected 15% decline), showing resilience
3. Policy Flexibility: MAS can adjust the exchange rate policy as needed

The Bigger Picture: AI Disruption

Dr Khor’s most provocative insight is that Singapore (and Asia) should worry less about Trump’s trade wars and more about artificial intelligence. He warns of re-industrialisation without labour, a rapid process.

For Singapore, this suggests:

• Traditional manufacturing jobs may disappear regardless of trade policies
• The focus should shift to AI-ready skills and industries
• Singapore’s financial and tech sectors become even more crucial

Strategic Implications

Dr Khor’s analysis suggests Singapore should:

1. Ride the Dollar Decline: Use US currency weakness to strengthen regional position
2. Diversify Dependencies: Reduce reliance on US markets while Trump policies create uncertainty
3. Prepare for AI Shock: Focus less on preserving old industries, more on future-ready sectors
4. Leverage Regional Role: Use stability and strong institutions to attract investment fleeing US policy uncertainty

His underlying message is that Singapore’s small, adaptable economy is well-positioned to navigate Trump-era disruptions – possibly emerging stronger as larger economies struggle with rigidity and political constraints.

The interview reveals Dr Khor sees current disruptions as manageable adjustments rather than existential threats, provided Singapore maintains its pragmatic, evidence-based policy approach that has served it well through previous crises. Retry

1. Structural Arguments for Market Resilience: Why economic gravity beats political theatre, the diminishing American hegemony, and self-defeating protectionist dynamics
2. The Dollar Decline Analysis: How the loss of “exorbitant privilege” creates opportunities for other economies
3. Singapore’s Strategic Position: Detailed examination of sectoral winners/losers and adaptive strategies
4. The AI Disruption Thesis: Dr Khor’s insight that automation poses a bigger challenge than trade wars
5. A Detailed Business Case Study: The story of “TechLogistics Pte Ltd,” a fictional but realistic Singapore company that not only survived Trump’s trade disruptions but thrived by embracing agility, AI technology, and crisis management as core competencies

The business story showcases practical strategies, including geographic diversification, AI integration, currency hedging, and positioning crisis expertise as a premium service. It demonstrates how Singaporean businesses can capitalize on stable institutions, robust technological infrastructure, and a strategic location to transform global disruptions into a competitive advantage.

The analysis concludes that markets possess “antifragility”—they grow stronger from stress—and that Singapore is well-positioned to benefit from this transformation if businesses and policymakers adopt a proactive approach to change rather than resist it.

Why Global Markets Will Survive Trump: A Deep Economic Analysis

Based on insights from Dr Khor Hoe Ee, veteran economist and former AMRO Chief Economist

Executive Summary

The global economy stands at a crossroads. President Trump’s aggressive trade policies have sent shockwaves through international markets, triggering fears of a new era of protectionism and economic fragmentation. Yet veteran economist Dr Khor Hoe Ee, who has navigated four decades of global crises, offers a contrarian view: the markets will not only survive Trump’s assault on trade but may emerge more resilient and diversified.

This analysis examines why global markets possess inherent structural advantages that transcend political disruptions, how Singapore can specifically leverage current uncertainties to its advantage, and what this means for businesses navigating the new reality.

The Structural Case for Market Resilience

Economic Gravity Beats Political Theatre

Dr Khor’s central thesis rests on a fundamental economic principle: gravity always wins. The United States imports over $3 trillion worth of goods annually—a massive flow that cannot simply be wished away by political decree. This creates what economists refer to as “import dependency inertia.”

Consider the mathematics: even if Trump successfully reduces Chinese imports by $200-300 billion, the US economy still requires those goods. They must come from somewhere. This creates immediate arbitrage opportunities for other suppliers, particularly in Southeast Asia.

The regional breakdown is telling:

• China: ~$450 billion in US imports
• ASEAN region: ~$350 billion in US imports
• Total global imports: $3+ trillion

Even aggressive tariff policies cannot eliminate this fundamental demand. They can only redirect it, creating opportunities for nimble economies to capture displaced market share.

The Diminishing American Hegemony

A critical factor in Dr Khor’s optimism is America’s declining share of global trade. At just 15% of worldwide commerce, the US is no longer the overwhelmingly dominant force it once was. This diversification provides the global economy with natural shock absorbers.

The implications are profound:

• Market alternatives exist: Asia-Europe, intra-Asian, and South-South trade corridors have matured
• Dollar dependency is weakening: Alternative payment systems and currency arrangements are gaining traction
• Supply chain redundancy: Modern global supply chains have multiple pathways, not single points of failure

Self-Defeating Policy Dynamics

Dr Khor identifies a crucial flaw in protectionist logic: it makes the implementing country less competitive over time. Tariffs function as a tax on domestic consumers and businesses, gradually eroding competitiveness while protecting inefficient domestic industries.

Historical precedent supports this view. The Smoot-Hawley Tariff Act of 1930, implemented during the Great Depression, initially seemed to protect American workers but ultimately deepened and prolonged economic suffering by triggering retaliatory measures and reducing overall trade efficiency.

Trump’s policies create similar dynamics:

• Inflation pressure: Tariffs drive up domestic prices
• Retaliation cycles: Trading partners respond with their own barriers
• Innovation stagnation: Protected industries lose incentives to improve
• Currency consequences: Trade wars typically weaken the aggressor’s currency over time

The Pragmatic Trump Factor

Dr Khor’s Washington experience reveals an important behavioural pattern: Trump consistently moderates positions when facing genuine economic constraints. This isn’t idealism—it’s pattern recognition based on observing how politicians respond to market feedback.

Examples of this pragmatism include:

• Temporary trade truces when markets crater
• Exemptions for critical industries facing severe disruption
• Rhetorical escalation followed by quiet negotiations
• Walking back positions that prove economically untenable

This suggests that the most extreme tariff proposals may never be fully implemented, or will be modified when their economic costs become apparent.

The Great Dollar Decline: Opportunity in Crisis

Loss of “Exorbitant Privilege”

Perhaps Dr Khor’s most prescient observation concerns the US dollar’s declining status. For decades, America has enjoyed what former French Finance Minister Valéry Giscard d’Estaing called “exorbitant privilege”—the ability to print the world’s reserve currency and finance deficits at preferential rates.

This privilege is now eroding, evidenced by a historically unusual phenomenon: US Treasury yields and the dollar are moving independently. Traditionally, when yields rise, the dollar strengthens as investors chase higher returns. This correlation is breaking down, signalling a decline in confidence in dollar assets.

The numbers are stark:

• US debt trajectory: heading toward 135% of GDP
• Credit rating downgrades: All major agencies have cut US sovereign ratings
• Yield-dollar divergence: A clear signal of declining “safe haven” status

Implications for Global Finance

This dollar weakness creates profound shifts in global financial architecture:

Immediate Effects:

• Emerging market currencies gain breathing room
• Commodities become more affordable for non-dollar buyers
• Trade finance diversifies away from dollar systems

Long-term Structural Changes:

• Central banks accelerate dollar reserve diversification
• Alternative payment systems (like China’s CIPS) gain adoption
• Regional currency arrangements become more attractive

Policy Space Creation: Countries can now pursue more independent monetary policies without immediately triggering capital flight—a crucial advantage during economic transitions.

Singapore’s Strategic Positioning: Threading the Needle

The Goldilocks Economy

Singapore faces a unique challenge: its currency strength (1.28 SGD/USD at the time of Dr Khor’s interview) creates both opportunities and obstacles. However, Dr Khor argues this represents a “Goldilocks” position—strong enough to matter, small enough to adapt.

The city-state’s economy demonstrates remarkable balance:

• Manufacturing resilience: Maintained 20% of GDP vs. projected 15% decline
• Financial sector growth: Benefiting from regional flight-to-quality
• Labour market tightness: Indicating genuine economic strength
• Policy flexibility: Exchange rate-based monetary policy provides unique tools

Sectoral Winners and Losers

Winners in the New Environment:

Financial Services: Singapore’s role as Asia’s financial hub becomes more valuable during global uncertainty. As businesses seek stable jurisdictions for treasury management and trade finance, Singapore’s regulatory credibility and political stability create competitive advantages.

Technology and Innovation: The city-state’s investments in AI, fintech, and digital infrastructure position it well for the coming “AI shock” that Dr Khor identifies as more significant than trade wars.

Logistics and Trade Finance: Even if trade patterns shift, goods still need efficient routing and financing. Singapore’s port and financial infrastructure remain critical.

Challenged Sectors:

Traditional Retail: Currency strength makes Singapore expensive for tourists, reducing competitiveness in price-sensitive sectors.

Labour-Intensive Manufacturing: Higher costs make Singapore less attractive for basic manufacturing, but this aligns with the country’s development strategy.

Export-Dependent SMEs: Smaller companies with limited geographic diversification face pressure from currency strength and trade uncertainty.

Strategic Adaptations

Singapore’s response demonstrates sophisticated economic management:

Regional Integration: Supporting Johor’s Special Economic Zone creates a lower-cost manufacturing alternative while maintaining Singapore’s high-value activities—a classic “hub and spoke” strategy.

Currency Policy Flexibility: The Monetary Authority of Singapore’s exchange rate-focused approach offers more policy tools than traditional interest rate regimes, particularly during periods of global currency volatility.

Economic Diversification: Continued emphasis on moving up the value chain, from manufacturing toward services and innovation.

The AI Disruption: The Real Challenge Ahead

Beyond Trade Wars: The Coming Labourer Shock

Dr Khor’s most provocative insight concerns artificial intelligence. While policymakers focus on trade tensions, he argues that the real disruption comes from the adoption of automation and AI, particularly in China.

The scale is unprecedented:

• Chinese automation acceleration: Massive investments in industrial AI and robotics
• “Re-industrialisation with minimal human workers
• Regional spillover effects: Even Chinese investments in Southeast Asia will be capital-intensive, not labour-intensive

This creates a paradox: countries may “win” trade war relocations but gain few jobs in the process.

Implications for Singapore

For Singapore, this trend is simultaneously challenging and opportunistic:

Challenges:

• The traditional pathway from manufacturing to services may no longer apply regionally
• Need for massive reskilling as AI transforms white-collar work
• Competition from AI-enhanced economies with lower labour costs

Opportunities:

• Early AI adoption can enhance productivity across all sectors
• Position as regional AI governance and ethics hub
• Leverage the education system to produce an AI-ready workforce
• Financial services automation creates new competitive advantages

Business Case Study: TechLogistics Pte Ltd – Surviving and Thriving

A fictional but representative story based on real market dynamics

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The Company

TechLogistics Pte Ltd started in 2018 as a mid-sized freight forwarding and supply chain management company serving electronics manufacturers across Southeast Asia. Founded by former Singaporean shipping executive Rachel Tan, the company built its reputation on two core strengths: deep relationships with Chinese suppliers and sophisticated digital logistics platforms.

By early 2025, TechLogistics employed 180 people across Singapore, Malaysia, and Vietnam, handling approximately $2.2 billion in trade flows annually. Their client base included mid-tier electronics manufacturers, automotive parts suppliers, and emerging direct-to-consumer brands shipping from Asia to global markets.

The Trump Shock: Initial Impact

When President Trump announced sweeping tariffs in January 2025, TechLogistics faced immediate disruption:

Immediate Challenges:

• 35% of client shipments targeted US markets
• Chinese suppliers faced 25-60% tariff increases
• Clients began demanding rapid supply chain reconfiguration
• Currency volatility complicated pricing and hedging

Early Warning Signs: Rachel noticed troubling patterns by February 2025:

• Three major clients announced production shifts out of China
• Vietnamese factories received inquiry spikes but lacked capacity
• Malaysian suppliers struggled with quality control scaling
• Shipping routes became inefficient as volumes were redistributed

The Crisis Moment: In March 2025, TechLogistics’ largest client—a mid-tier laptop manufacturer—announced that it was terminating its contract. The company was shifting production to Mexico to avoid tariffs, using a US-based logistics provider. This single loss represented 22% of TechLogistics’ revenue.

Strategic Pivot: Embracing the Chaos

Rather than panic, Rachel applied lessons learned from previous crises (she had worked in shipping during the 2008 financial crisis). She recognised that disruptions create opportunities for individuals to think critically.

Phase 1: Emergency Adaptation (March-April 2025)

Client Triage and Retention:

• Conducted detailed interviews with all major clients about their relocation plans
• Identified which clients were definitely leaving Asia vs. those exploring options
• Offered temporary fee reductions to retain wavering clients during transition periods

Geographic Expansion:

• Opened small offices in Penang, Malaysia and Batam, Indonesia
• Partnered with local logistics providers in Vietnam and Thailand
• Established relationships with Mexican and Central American shipping agents

Technology Investment:

• Deployed AI-powered supply chain mapping tools to identify alternative suppliers
• Created real-time tariff impact calculators for clients
• Developed automated compliance documentation systems

Phase 2: Market Opportunity Recognition (May-June 2025)

Rachel realised that while the clients were hurt, the broader market disruption created massive opportunities:

The “Reshoring Premium”: Companies desperately seeking non-Chinese suppliers were willing to pay premium rates for logistics expertise and guaranteed capacity. TechLogistics positioned itself as the “crisis specialist.”

Currency Arbitrage: Following Dr Khor’s prediction, the weakening US dollar made Southeast Asian production more attractive. TechLogistics helped clients capitalise on more favourable opportunities.

Supply Chain Consultation: Beyond pure logistics, companies needed strategic advice on supplier diversification and risk management. TechLogistics launched a consulting arm, charging $ 15,000 to $50,000 per engagement.

The AI Integration Strategy

In July 2025, Rachel made a bold decision that would define the company’s future: embracing AI not as a threat but as a competitive weapon.

AI-Powered Supplier Discovery:

• Deployed machine learning algorithms to identify potential suppliers across 15 countries
• Created automated quality assessment systems using satellite imagery and public data
• Developed predictive models for supplier reliability and scalability

Automated Compliance and Documentation:

• Used AI to navigate increasingly complex trade regulations across multiple jurisdictions
• Created an automated customs documentation system, reducing processing time by 70%
• Implemented real-time regulatory change monitoring across 25 countries

Dynamic ROptimizationation:

• Deployed algorithms that continuously optimized shippingoptimizedased on tariffs, capacity, weather, and geopolitical factors
• Created “resilience scoring” for different shipping corridor combinations
• Offered clients guaranteed delivery times even during disruptions

Results and Growth

By October 2025, TechLogistics had not only survived but thrived:

Financial Performance:

• Revenue grew 34% year-over-year despite losing major US-focused clients
• Profit margins increased from 8% to 14% due to premium pricing and operational efficiency
• Client base diversified: US market exposure dropped from 35% to 18%

Operational Expansion:

• Staff increased to 240 people across 8 countries
• Opened offices in Mexico City and Jakarta
• Launched joint ventures with logistics providers in India and Bangladesh

Strategic Positioning:

• Became the go-to logistics partner for companies navigating trade war disruptions
• Won “Southeast Asian Logistics Innovation Award” for AI integration
• Consulted for three Fortune 500 companies on supply chain resilience

Key Success Factors

Agility Over Scale: While larger competitors struggled with bureaucratic decision-making, TechLogistics could pivot strategies within weeks.

Technology as Differentiator: AI investments have created genuine competitive advantages, rather than simply reducing costs.

Crisis as Strategy: Instead of waiting for stability, the company built its strategy around managing permanent volatility.

Relationship Depth: Deep supplier relationships across multiple countries proved more valuable than scale in any single market.

Currency Hedging Sophistication: Working with Singaporean banks to develop complex hedging strategies that turned currency volatility into profit opportunities.

Lessons for Singapore Businesses

TechLogistics’ experience illustrates broader principles for navigating the Trump era:

1. Diversification as Defence: Companies overly dependent on US markets or Chinese suppliers faced existential risk
2. Technology Investment Pays: AI and automation became competitive necessities, not luxuries
3. Agility Beats Size: Small organizations could adapt faster than large, bureaucratic ones
4. Crisis Expertise Commands Premiums: Companies skilled at managing disruption could charge premium rates
5. Currency Volatility as Opportunity: Sophisticated financial management could turn instability into profit

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Policy Implications and Strategic Recommendations

For Singapore Policymakers

Monetary Policy Advantages: Singapore’s exchange rate-based monetary policy offers unique flexibility during periods of global currency volatility. The MAS should continue leveraging this tool to maintain competitiveness while supporting domestic demand.

Regional Leadership Opportunities: As US influence wanes, Singapore can position itself as the stable, neutral hub for regional trade finance and dispute resolution.

AI Governance Framework: Developing comprehensive AI governance standards could make Singapore the preferred jurisdiction for AI-intensive businesses relocating from more restrictive environments.

For Singapore Businesses

Embrace Currency Strength: Rather than complaining about the strong Singapore dollar, businesses should leverage it for strategic acquisitions and overseas expansion while costs are relatively low.

Invest in Resilience, Not Efficiency: The Optimisation of Efficiency Over. Companies need redundant suppliers, multiple shipping routes, and flexible production capabilities to ensure continuity and resilience.

AI as a Competitive Weapon: Early Adoption of AI can create sustainable competitive advantages, particularly in logistics, finance, and professional services.

Conclusion: Antifragility in Action

Dr Khor’s analysis reveals a profound truth about modern global markets: they have evolved beyond dependence on any single political leader or country. The global economy has developed what economist Nassim Taleb calls “antifragility”—the ability to grow stronger in the face of stress and volatility.

Trump’s trade policies, rather than destroying global commerce, are accelerating its evolution toward greater diversity recognition and technological sophistication. Companies and countries that recognize this recognition themselves accordingly will not only survive but also thrive.

For Singapore, the path forward requires embracing its role as a recognised leader in an increasingly unstable technological age and recognising that creativity reflects genuine economic resilience rather than a burden to be managed.

The markets will indeed survive Trump and emerge more sophisticated, diversified, and resilient than before. The question is not whether this transformation will occur, but which businesses and countries will position themselves to benefit from it.

The future belongs not to those who resist change, but to those who harness chaos as a source of competitive advantage.

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