An In-Depth Analysis | February 2026
PART I: THE UNRAVELLING OF AN AGENDA
The Supreme Court Repudiation
In what analysts are already calling one of the most consequential judicial decisions of the decade, the United States Supreme Court ruled on 20 February 2026, in a 6-3 decision in Learning Resources, Inc. v. Trump, that the International Emergency Economic Powers Act (IEEPA) does not authorise the President to impose tariffs. The ruling effectively invalidated the sweeping tariff architecture that the Trump administration had painstakingly assembled over the preceding year, dismantling what had become the centrepiece of its economic nationalist agenda.
The administration had invoked the IEEPA to justify an array of import levies — an across-the-board 10% baseline tariff on all global imports and significantly higher rates on dozens of countries — framed as ‘reciprocal’ measures to correct what Trump repeatedly characterised as decades of unfair trade practices. The Supreme Court’s finding that such emergency powers were never intended to serve as a tariff-levying mechanism strips the administration of its most potent unilateral trade instrument, forcing a hasty pivot to Section 232 of the Trade Expansion Act of 1962, a provision traditionally reserved for national security-related trade restrictions.
The administration’s immediate response was defiant. Decrying what it called the court’s ‘lawlessness,’ the White House announced a replacement 10% universal tariff under Section 122 of the Trade Act of 1974 — a statute carrying a 150-day limitation — and vowed to explore further legislative and executive avenues. Yet legal analysts broadly agree that the administration now operates on constitutionally narrower ground. Trillions of dollars in tariff revenue that had already been collected may need to be refunded to importers, creating substantial fiscal and logistical complications.
The Economic Reckoning
The timing of the Supreme Court ruling compounds an already deteriorating economic picture. Revised GDP data released on the same day showed the US economy expanded at an annualised rate of only 1.4% in the October-to-December 2025 quarter — significantly below the 2.5% pace that markets had anticipated. This follows a year in which the Trump administration’s tariffs raised average household costs by an estimated USD 1,000. Even accounting for the now-invalidated IEEPA levies, remaining Section 232 tariffs are projected to sustain a per-household tax burden of approximately USD 400.
The Tax Foundation estimates that the effective average tariff rate surged from 2.4% in 2024 to 7.7% in 2025 — the highest since 1947. Studies have consistently found that these costs were borne not by foreign exporters but by domestic consumers and businesses. Inflation, which Trump had confidently declared ‘won’ during a rally in Georgia just days before the Court’s ruling, remains a visceral concern for ordinary Americans. Political scientists note the inherent danger in this disconnect. As Todd Belt of George Washington University observed to AFP, ‘you cannot out-message the economy. People know what they are spending.’
The Immigration Flashpoint
The administration’s other signature policy — a sweeping crackdown on undocumented immigration — has similarly generated backlash beyond what the White House anticipated. The broad enforcement operations, sold to the public as targeting violent criminals, ensnared a wider population than many Americans expected. A particularly jarring incident in Minneapolis, where federal immigration agents fatally shot two US citizens, prompted mass protests and forced the administration to scale back its deployment in the city — a rare and visible retreat.
Polling data reflects growing disaffection. While Trump’s base remains largely consolidated, the broader electorate is showing sensitivity to what critics describe as the collateral damage of indiscriminate enforcement. With midterm elections approaching in November 2026, Republican incumbents in competitive districts are beginning to distance themselves from the most controversial aspects of the immigration agenda.
The International Dimension
On the world stage, the administration has also faced a series of recalibrations. The ambition to acquire Greenland, pressed upon Denmark with a combination of economic threats and strategic arguments about Arctic security, has been substantially dialled back following international pushback and the establishment of a US-Denmark-Greenland working group — a face-saving diplomatic mechanism that signals negotiation rather than acquisition. The embarrassing posting of a racist video of former President Barack Obama to Trump’s own Truth Social account, which the White House initially attempted to ignore before attributing it to an unnamed aide, provided critics with additional evidence of an administration operating in a state of managed disorder.
PART II: SINGAPORE IN THE EYE OF THE STORM
A Trusted Friend Penalised
Few economies were as diplomatically aggrieved by Trump’s tariff regime as Singapore. Despite maintaining zero tariffs on American goods, hosting thousands of US multinationals, and running what the US Trade Representative itself certified as a goods trade surplus of USD 2.8 billion in Singapore’s favour in 2024, the city-state was nevertheless subjected to the 10% baseline levy. Prime Minister Lawrence Wong’s parliamentary response was notable for its candour and its controlled fury. ‘We are very disappointed by the US move,’ Wong told parliament, ‘especially considering the deep and longstanding friendship between our two countries. These are not actions one does to a friend.’
Wong made a pointed logical argument: if the tariffs were truly ‘reciprocal’ and targeted only nations with trade surpluses against the United States, Singapore’s rate should be zero. Singapore runs a trade deficit with Washington. The 10% rate, he noted, appeared to be a fixed floor rather than a negotiated outcome — impervious to Singapore’s FTA-based case and seemingly immune to diplomatic reasoning. The Singapore Trade Minister put the US trade surplus with Singapore — counting services, not merely goods — at approximately USD 30 billion annually, further undermining the administration’s framing.
The Semiconductor Vulnerability
Singapore’s deepest structural exposure lies in its semiconductor industry, which has evolved over nearly six decades from assembly and testing into a sophisticated hub for advanced packaging, wafer fabrication, and chip design. The sector underpins a substantial share of the nation’s export earnings and manufacturing output. In 2025, manufacturing grew 15% year-on-year, driven in significant part by demand for AI-related semiconductors and server hardware — a reflection of the global artificial intelligence investment boom that has been Singapore’s good fortune to service.
That favourable position is now shadowed by a significant tariff threat. Trump announced in August 2025 that a 100% tariff would apply to all semiconductor imports into the United States, exempting only companies that had committed to or were actively constructing manufacturing facilities on American soil. For Singapore’s chipmakers, many of whom form part of deeply integrated global supply chains serving the US market, the implications are potentially severe. The Singapore Semiconductor Industry Association warned of supply chain disruption, rising costs, and demand destruction if the tariff were broadly applied. Airfreight costs — the preferred logistics mode for high-value chips — could also be materially affected. As of February 2026, a 25% tariff on a narrower category of re-exported chips took effect in January, with broader semiconductor tariffs still under Section 232 investigation.
The pharmaceutical sector faces parallel uncertainty. Trump’s 100% tariff threat on branded pharmaceutical imports, subsequently moderated to 25% and higher for most countries, creates risk for Singapore’s life sciences manufacturing cluster. A December 2025 deal exempting British pharmaceutical exports from such tariffs at 0% in exchange for commitments to invest in the US suggests that bilateral negotiation remains possible — but Singapore has yet to secure equivalent relief.
Resilience Despite Adversity
Singapore’s actual economic performance in 2025 defied the gloomy forecasts that proliferated when Trump’s tariff agenda first crystallised. GDP expanded by approximately 4.8% — the fastest pace since 2021 and far above the government’s initial 1-3% forecast range. This outperformance reflects several structural advantages: Singapore’s role as a global transshipment hub means it benefits from trade rerouting even as some of its direct exports face headwinds; its semiconductor sector caught the tailwind of the global AI infrastructure boom; and its pharmaceutical manufacturing cluster proved remarkably resilient.
Business sentiment surveys conducted in late 2025 found that 23% of manufacturing companies reported optimistic outlooks versus 15% expressing pessimism — a net positive balance. However, specific subsectors told a more cautionary tale. Precision engineering, machinery systems, and computer peripherals were all bracing for headwinds in early 2026, reflecting concerns about demand slowdowns and the tariff overhang. Real estate and transportation and storage were the two industries explicitly forecasting contraction, the former weighed down by domestic cooling measures compounded by external investor uncertainty.
Strategic Adaptations: Singapore’s Policy Response
The Singapore government’s response to the Trumpian trade environment has been characterised by pragmatism over provocation. Unlike many US trading partners, Singapore declined to impose retaliatory tariffs — a decision reflecting both its fundamental commitment to free trade and a realistic appraisal of the asymmetric leverage involved. PM Wong announced the formation of a dedicated task force under the Economic Development Board to assist businesses and workers navigating tariff-related disruptions. The government allocated USD 3 billion to the National Productivity Fund and USD 150 million to an Enterprise Compute Initiative to accelerate AI adoption across the domestic economy.
Diversification has emerged as a guiding strategic principle. Singapore is simultaneously pursuing new free trade agreements, deepening its participation in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and cultivating trade relationships that reduce dependence on any single market. On the production side, the government is funding the buildout of over 2 gigawatts of renewable energy capacity by 2030, positioning Singapore as a green finance and sustainable manufacturing hub — sectors less exposed to US tariff pressure than traditional electronics.
The city-state is also leveraging its role as a neutral financial and legal hub. As geopolitical tensions reconfigure global capital flows, Singapore’s rule-of-law environment, its deep pool of professional services, and its strategic geographic position make it an increasingly attractive base for multinational companies seeking to manage exposure to the US-China bifurcation. Oxford Economics has argued that Singapore is likely to gain US import share over the next decade as other countries — particularly higher-tariff competitors in Southeast Asia — lose theirs.
PART III: OUTLOOK AND IMPLICATIONS
The Midterm Horizon
The domestic political calculus in Washington will increasingly shape Singapore’s external environment over the next eighteen months. With all seats in the House of Representatives and one-third of the Senate up for election in November 2026, Republican lawmakers in competitive districts face mounting pressure to distance themselves from policies that have raised consumer prices, unsettled global markets, and, as the Supreme Court ruling underscores, overreached constitutional boundaries. Trump has already warned that a Democratic majority would seek to impeach him — an acknowledgement that the political stakes of the midterm outcome are existential for his agenda.
Should Democrats recapture the House, the legislative bandwidth for further tariff escalation would narrow considerably. Conversely, a Republican hold would likely embolden the administration to pursue tariffs through whatever legislative or executive mechanisms survive judicial scrutiny. For Singapore and the broader region, the scenario of continued Republican control combined with an administration determined to find ‘other ways to implement tariffs’ — as the White House pledged after the Supreme Court ruling — remains the more challenging outlook.
The Broader ASEAN Calculus
Singapore’s fortunes are inseparable from the wider health of the ASEAN economic ecosystem. The tariff regime has reshuffled regional competitive advantages in complex ways. Vietnam, which faced punishing rates initially, negotiated a 19-20% arrangement by mid-2025, but remains deeply exposed to any crackdown on transshipment — a practice through which Chinese goods are rerouted via Southeast Asian assembly to circumvent direct China tariffs. Malaysia, similarly, struck a 19% deal after playing a diplomatic role in a regional ceasefire agreement, underscoring Trump’s willingness to use tariffs as instruments of broader geopolitical leverage.
The rerouting phenomenon has produced a paradox: US trade with Southeast Asia and Taiwan surged in 2025 despite — or rather, because of — the tariffs, as supply chains reorganised around the new incentive landscape. As Deborah Elms of the Hinrich Foundation observed, ‘if you squeeze a balloon in one direction and people still want the product, they will get it from a different location.’ Singapore, as the region’s pre-eminent logistics and financial hub, is positioned to intermediate this reorganisation, but not without exposure to the volatility it generates.
Conclusion: Navigating the Choppy Waters
The image of Donald Trump stumbling ahead of his State of the Union address is, in one sense, a story of overreach colliding with institutional constraint. The Supreme Court’s rebuke of the IEEPA tariffs is a reminder that the American constitutional architecture retains meaningful checks on executive unilateralism, even in a period of significant partisan polarisation. For allies and trading partners, including Singapore, this represents a structural ceiling on the damage any single US administration can inflict through executive action alone.
Yet the more sobering conclusion is that the terrain remains deeply uncertain. The administration retains Section 232 authorities, it controls the regulatory apparatus governing trade enforcement, and it operates in a political environment where economic nationalism commands genuine popular support. The semiconductor tariff threat, the pharmaceutical tariff overhang, and the possibility of further unilateral measures targeting countries that fail to align with Washington’s preferred trade postures will continue to shadow Singapore’s economic planning for years to come.
Singapore’s response — measured, diplomatically restrained, and strategically agile — offers a template for small open economies navigating a world in which the multilateral trading system’s assumed stability can no longer be taken for granted. Whether that template is sufficient to preserve the prosperity the city-state has built over six decades of export-led growth will depend, in no small measure, on decisions taken in Washington, on American courts, and at the ballot box in November 2026.
Sources: AFP, Tax Foundation, PwC Singapore, South China Morning Post, Al Jazeera, Sidley Austin LLP, The Edge Singapore, Vulcan Post, Oxford Economics, A*STAR, Fortune, Fox Business, Malay Mail — February 2026.