An Analysis of Potential Impacts on Trade, Supply Chains, and Regional Stability

President Donald Trump’s threat to impose a 100% tariff on Canadian goods has sent shockwaves through global markets, and while Singapore may seem geographically distant from this North American dispute, the city-state’s deeply interconnected economy means it could feel significant ripple effects across multiple sectors.

Trump warned that China would “eat Canada alive” and “completely devour it” if the deal goes through. Interestingly, Trump initially seemed supportive of Canada-China trade talks when Canadian Prime Minister Mark Carney visited China earlier this month.

The relationship soured after Carney criticized Trump’s interest in Greenland and made remarks at the World Economic Forum in Davos. There, Carney argued that “middle powers must act together because if you are not at the table, you are on the menu,” receiving a standing ovation from world leaders. This was seen as a challenge to U.S. dominance without directly naming the United States.

Trump responded by saying Canada “lives because of the United States,” which Carney firmly rejected, stating that Canada thrives on its own merits. Trump has since revoked Canada’s invitation to his proposed Board of Peace.

Economic implications:

A 100% tariff would severely impact Canadian industries including metal manufacturing, automobiles, and machinery. Trump also suggested concerns that Canada might become a “drop-off port” for Chinese goods trying to avoid U.S. tariffs.

This comes as the USMCA trade agreement between the U.S., Canada, and Mexico is up for renegotiation in July—an agreement Trump recently dismissed as “irrelevant.”

The Global Trade Context

Trump’s warning came after Canadian Prime Minister Mark Carney negotiated a trade deal with China and subsequently criticized American unilateralism at the World Economic Forum in Davos. The escalating tensions represent more than a bilateral spat—they signal a fundamental restructuring of global trade relationships that Singapore has built its prosperity upon.

For a trade-dependent nation like Singapore, where total trade amounts to more than three times its GDP, any disruption to the rules-based international order that Carney referenced poses existential concerns. Singapore’s economy is engineered around predictable trade flows, stable supply chains, and multilateral cooperation—precisely the foundations now being challenged.

Direct Trade Exposure

Singapore’s direct trade with Canada, while not massive, is significant in specific sectors. In 2024, bilateral trade between Singapore and Canada reached approximately SGD 8.5 billion, with Singapore exporting pharmaceuticals, electronics, and refined petroleum products while importing Canadian agricultural commodities, machinery, and specialized industrial equipment.

A 100% U.S. tariff on Canadian goods would likely devastate Canadian export industries, reducing their purchasing power and potentially cutting demand for Singapore’s exports. Canadian manufacturers struggling under such tariffs would have less capacity to import the precision components, electronics, and chemicals that Singapore supplies.

Supply Chain Disruptions

The more serious concern lies in global supply chain fragmentation. Singapore serves as a critical logistics hub connecting East and West, and many multinational corporations use the city-state as a regional headquarters for coordinating complex production networks that span North America, Europe, and Asia.

If U.S.-Canada trade relations deteriorate severely, companies may need to restructure their supply chains to avoid tariff exposure. This restructuring could affect Singapore-based operations in several ways. Multinational corporations headquartered in Singapore that coordinate North American operations would face increased compliance costs and operational complexity. Technology and electronics firms that source components from multiple countries, including Canada, might need to reconfigure their supplier networks, potentially reducing Singapore’s role as a consolidation point.

The pharmaceutical sector presents particular vulnerability. Singapore is a major pharmaceutical manufacturing hub, and many global drug companies have operations connecting research in Canada with manufacturing in Singapore and markets across Asia. Trade barriers between the U.S. and Canada could complicate these integrated operations.

The China Calculation

Perhaps most significantly for Singapore, Trump’s threat explicitly ties to Canada’s engagement with China. The underlying message is clear: countries that deepen economic ties with China risk American retaliation. This puts Singapore in an uncomfortable position.

China is Singapore’s largest trading partner, accounting for roughly 15% of total trade. The United States is Singapore’s third-largest trading partner and a crucial source of investment, technology, and security cooperation. Singapore has carefully maintained strong relationships with both powers, but the emerging framework of Trump’s trade policy suggests this balancing act may become increasingly difficult.

Singapore has consistently advocated for open, rules-based trade and has resisted pressure to choose sides between the U.S. and China. However, if Trump follows through on threats to punish countries that strengthen China ties, Singapore may face difficult decisions about its economic relationships.

Financial Market Implications

As a major financial center, Singapore would likely experience market volatility from escalating U.S.-Canada tensions. The Singapore Exchange hosts numerous companies with North American exposure, and investor confidence could suffer if trade wars intensify.

Currency markets could also experience disruption. The Canadian dollar would likely weaken significantly under a 100% tariff regime, potentially affecting Singapore’s diversified foreign exchange reserves. More broadly, global risk sentiment would deteriorate, potentially triggering capital flows out of emerging Asian markets, including Singapore.

Singapore’s banks, which have significant international operations, might face increased credit risks if Canadian corporate borrowers struggle under tariff pressures. The wealth management sector could see clients seeking to reposition assets in response to heightened geopolitical uncertainty.

The Semiconductors and Technology Sector

Singapore’s semiconductor industry, which represents a crucial part of the economy, faces indirect risks. While Canada is not a major semiconductor producer, it supplies specialized materials and equipment used in chip manufacturing. Any disruption to Canadian mining operations or specialized manufacturers could affect the supply of rare earth elements and precision equipment that Singapore’s semiconductor fabs require.

Additionally, many technology companies use Singapore as a regional hub for serving both North American and Asian markets. If trade barriers between the U.S. and Canada force tech companies to create separate supply chains for different markets, Singapore’s value as a unified regional hub could diminish.

Shipping and Logistics

Singapore’s port, one of the world’s busiest, could see shifts in cargo volumes. Container shipping routes that currently connect North American ports with Asian markets might be reconfigured if trade between the U.S. and Canada contracts sharply. While some of this cargo might be rerouted through Singapore, overall global trade volumes would likely decline, reducing total throughput.

The maritime services sector, including ship financing, insurance, and brokerage, could also suffer from reduced global trade activity. Singapore has built a sophisticated ecosystem around shipping services, and prolonged trade tensions would create headwinds for this industry.

The “Middle Powers” Question

Carney’s speech in Davos specifically addressed how “middle powers” might navigate an era where American hegemony cannot be taken for granted. His call for middle powers to band together resonated with many countries, and Singapore certainly qualifies as a middle power seeking to preserve its autonomy and prosperity in a multipolar world.

Singapore officials have not publicly commented on Carney’s remarks, but the city-state faces similar challenges. As a small, trade-dependent nation, Singapore relies on international rules and norms to protect its interests. If larger powers increasingly resort to unilateral actions and economic coercion, Singapore’s carefully cultivated diplomatic strategy becomes more precarious.

The country may need to strengthen ties with other middle powers—including Canada, Australia, South Korea, and ASEAN partners—to create coalitions that can collectively resist being “on the menu,” as Carney phrased it. Singapore’s leadership in regional trade agreements like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP) reflects this approach.

Investment and Business Confidence

Singapore has worked for decades to position itself as a stable, predictable environment for business. The country’s attractiveness as an investment destination depends partly on being insulated from the kind of sudden, dramatic policy shifts that Trump’s tariff threat represents.

If American trade policy becomes increasingly unpredictable and punitive, multinational corporations may reconsider their global strategies. Some might reduce their exposure to international trade altogether, favoring nearshoring or regionalization strategies that reduce reliance on global supply chains. This would undermine Singapore’s value proposition as a global hub.

Conversely, some companies might seek to establish operations in Singapore specifically to navigate U.S.-China tensions and other trade conflicts. Singapore could position itself as neutral ground where companies can serve multiple markets without running afoul of any particular country’s trade restrictions. This opportunity, however, depends on Singapore successfully maintaining its neutrality—something that may become harder if countries like the U.S. demand alignment.

Regional Implications

Beyond Singapore’s direct exposure, broader regional stability matters enormously to the city-state. ASEAN countries collectively represent major trading partners, and instability in the regional economic order would harm Singapore’s economy.

If Trump’s approach to Canada becomes a template for dealing with other countries—threatening massive tariffs against those who deepen ties with China—Southeast Asian nations could face similar pressures. Many ASEAN countries depend heavily on both Chinese and American markets. Forced to choose, the region could fracture, undermining the economic integration that Singapore has promoted and benefited from.

Singapore has invested heavily in ASEAN cohesion and sees regional stability as essential to its security and prosperity. A fragmenting global trade system could make it harder to maintain ASEAN unity, as different countries face different pressures and make different choices about alignment with major powers.

What Singapore Can Do

In response to these challenges, Singapore has several options, though none are without risks or limitations.

The government can continue strengthening regional trade agreements and economic partnerships that don’t depend on U.S. participation. The CPTPP and RCEP provide frameworks for trade that could partially offset disruptions in trans-Pacific trade. Singapore can also deepen bilateral relationships with stable trading partners in Europe, the Middle East, and other regions to diversify its economic exposure.

Singapore can also invest in economic resilience by supporting industries that are less vulnerable to trade policy shifts. Strengthening domestic capabilities in food security, critical technologies, and essential services would provide buffers against external shocks. The government’s recent emphasis on food security and self-sufficiency, including exploring alternative sources for live pig imports from Indonesia, reflects this thinking.

Diplomatically, Singapore can work quietly to encourage restraint and dialogue. While the city-state cannot dictate terms to major powers, it can use its reputation for pragmatism and its extensive networks to facilitate communication and promote de-escalation. Singapore’s leaders have historically played roles as honest brokers, and this diplomatic capital may prove valuable.

Finally, Singapore can prepare its businesses and workforce for a more volatile global environment. This includes supporting companies in developing more flexible supply chains, helping workers acquire skills that remain valuable in various economic scenarios, and ensuring the financial system can weather increased turbulence.

The Broader Stakes

Trump’s threat against Canada over its China deal represents more than a trade dispute—it signals a possible end to the post-World War II international economic order that Singapore has thrived within. For seventy years, global trade has generally operated under agreed-upon rules, with disputes resolved through negotiation and institutional mechanisms like the World Trade Organization.

If major powers increasingly resort to unilateral economic coercion, smaller countries like Singapore lose the protections that rules-based systems provide. The strong can simply dictate terms to the weak, and middle powers must either submit, align with a protective patron, or find ways to collectively resist.

This uncertainty creates planning challenges for Singapore’s government and businesses. How do you make long-term investments when the rules of international commerce might change dramatically based on political whims? How do you maintain neutrality when neutrality itself might become untenable?

Conclusion

While Singapore is not directly involved in the U.S.-Canada dispute, the threatened tariffs and the broader trend they represent pose significant challenges. The immediate economic impact through disrupted supply chains, reduced trade volumes, and financial market volatility could be meaningful. More fundamentally, the erosion of rules-based international trade threatens the system that Singapore’s prosperity depends upon.

The coming months will reveal whether Trump follows through on his threat and whether this approach becomes a template for American trade policy. For Singapore, the imperative is clear: prepare for increased volatility, strengthen economic resilience, deepen relationships with diverse partners, and work collectively with other middle powers to preserve some semblance of order in international trade.

In Carney’s formulation, middle powers must ensure they’re “at the table” rather than “on the menu.” For Singapore, this means active engagement, strategic flexibility, and recognition that the comfortable certainties of the past may no longer apply. The city-state has navigated difficult geopolitical waters before, but the turbulence ahead may test that capability as never before.