The latest controversy on the social media these days is over the remarks made by President Donald Trump's ambassador to Singapore, Dr Anjani Kumar Sinha. When asked about the 10% baseline tariff imposed on Singapore by Donald Trump in spite of a free trade agreement since 2004, Dr Sinha commented that "over many decades, American taxpayers and service members have underwritten regional security, playing an important role in making Singapore's economic miracles possible".
Personal Thoughts
So despite the trade surplus enjoyed by the US trading with Singapore, the 10% import tariff imposed on Singapore by Donald Trump is actually a form of "Protection money". This reminded me of the early days of Singapore when Triads or Secret Societies run amok. Historically, Triads or Secret Societies in Singapore heavily relied on demanding protection money (extortion) as a primary source of income, particularly during the colonial era and the mid-20th century. This activity was a major menace to shopkeepers, hawkers, and residents during that dark historical era.
Interestingly, it appears that Dr Sinha is insinuating that US is acting like a Mafia and imposing "Protection money" on Singapore and Singaporeans should be grateful for it. So, now we know that the 10% import tariff levied on Singapore is actually not a tariff on imports but rather "Protection money".
As a matter of fact, I believe the 10% import tariff impose on Singapore by USA is a form of reciprocate to Singapore impose 9% GST on import from USA.
ReplyDeleteHi Sir,
DeleteThanks for dropping by and sharing your thoughts.
My view is that this is not the case. The US did not impose a 10% import tariff on Singapore because of Singapore's 9% Goods and Services Tax (GST). Instead, the US imposed a universal 10% import tariff on nearly all countries, including Singapore, as part of a broader "reciprocal" tariff plan initiated in April 2025. This action was a result of US President Donald Trump's trade policy aimed at addressing trade deficits, and it was applied to Singapore despite the city-state having a free trade agreement with the US and a trade deficit with the US.
Additionally, GST vs. import tariff: Singapore's 9% GST is an internal consumption tax that is applied to goods sold within the country, while the US tariffs are taxes on goods imported into the US. The two are separate and were not the cause of each other in this specific instance.
For example, US cruise ships that came for dry docking in Singapore actually do not even pay any GST for imports as these are deemed as international goods and services and are zero-rated. Similarly, US companies which use Singapore as a consolidation hub for their imports from different origin before sending out to other ASEAN countries or Australia are also zero-rated for GST.