Tariffs and Chips: Singapore’s Talks with the U.S.

Singapore is negotiating with the United States to secure relief from new tariffs on its pharmaceutical exports while also seeking greater access to advanced semiconductor and AI technologies. These talks reflect Singapore’s broader strategic priorities: protecting its high-value export sectors, reinforcing its status as a trusted global supply chain partner, and deepening its economic integration with a key trade ally.

Bilateral trade between Singapore and the United States reached US$89.2 billion in 2024, with US$46 billion in U.S. exports to Singapore and US$43.2 billion in imports. These figures underscore the depth of their trade relationship, making disruption in key sectors like pharmaceuticals and semiconductors a risk neither side is likely to welcome.

U.S. officials have signaled a willingness to explore “creative solutions” in response to Singapore’s concerns. During an April 2024 visit to Washington, Deputy Prime Minister Gan Kim Yong met with U.S. Commerce Secretary Gina Raimondo to commemorate the 20th anniversary of the U.S.-Singapore Free Trade Agreement and discuss deepening economic cooperation.

This was followed by a phone call in April 2025 with Secretary Howard Lutnick, where both parties discussed how to address the newly imposed 10 percent tariff on Singapore’s pharmaceutical exports and explore options for AI chip access.

New tariffs hit pharmaceutical exports

In 2023, Singapore exported approximately US$9.96 billion in pharmaceutical products, up from US$6.8 billion in 2022. These exports now face a 10 percent baseline tariff, introduced in April 2025 as part of a broader U.S. trade action aimed at correcting perceived trade imbalances. While the tariffs are not targeted in Singapore specifically, they apply across a range of imported goods regardless of origin, placing even compliant partners at a disadvantage.

This development has introduced fresh uncertainty into a trade relationship that has historically been anchored by predictability and mutual market access. It also raises concerns over whether existing frameworks like the U.S.-Singapore Free Trade Agreement, signed in 2004 to guarantee tariff-free access for most goods, are being sidelined by newer, more discretionary trade doctrines.

Singapore has flagged these tariffs as economically misaligned with its role in the global medical supply chain and has called for constructive resolution through bilateral dialogue.

Protecting Singapore’s biopharma hub

Singapore’s pharmaceutical sector plays an outsized role in the country’s advanced manufacturing ecosystem. In 2023, the sector produced over S$19 billion in output and employed more than 9,000 workers, many of them in R&D, quality control, and specialized production roles. Pharmaceuticals account for a substantial portion of Singapore’s non-oil domestic exports and support a complex network of logistics, compliance, and biomedical services.

Importantly, seven of the world’s top 10 biopharmaceutical companies maintain operations in Singapore, including Pfizer, GSK, Roche, and Merck. These facilities are globally integrated and serve as manufacturing bases for supply to the U.S., Europe, and emerging markets.

Recent high-profile investments reflect the sector’s continued strategic relevance. In 2024, Novartis committed US$256 million to expand its cell and gene therapy capabilities in Singapore, while AstraZeneca announced plans for a US$1.5 billion antibody-drug conjugate (ADC) production facility. These developments are geared not just toward regional supply, but toward reinforcing Singapore’s position as a trusted, high-quality global supplier.

Officials have framed the issue as one of strategic fairness, arguing that the application of broad tariffs to a compliant and trusted partner sends the wrong signal to global investors.

The role of the U.S.-Singapore FTA and its limits

While the U.S.-Singapore Free Trade Agreement has anchored bilateral trade for over two decades, recent policy shifts are testing its resilience. The blanket 10 percent tariff introduced in 2025 represents a broader move away from traditional rules-based liberalization, toward a more security- and reciprocity-driven trade model.

Singapore’s case is that close allies with strong compliance records should be protected from unintended collateral impact. The pharmaceutical sector, given its public health importance and strict regulatory environment, is a logical place to start.

Access to advanced chips and AI technologies

In tandem with tariff relief talks, Singapore is seeking more predictable access to advanced U.S. semiconductors and AI technologies, both essential to its long-term innovation strategy. While these technologies are increasingly controlled under U.S. export restrictions, Singapore has highlighted its robust compliance standards and neutral geopolitical stance.

In 2023, Singapore’s semiconductor manufacturing sector generated over US$101 billion, representing roughly 7 percent of the national GDP. These chips support critical industries such as telecommunications, healthcare, and aerospace.

Singapore also ranks 3rd globally in the AI Readiness Index and launched its National AI Strategy 2.0 in 2023 to embed AI across strategic sectors like healthcare, transport, public services, and finance. These ambitions depend heavily on access to high-performance processors, such as those produced by Nvidia and AMD, now subject to tighter licensing regimes.

Although no formal proposal has been announced, Singapore continues to make the case that its secure, rules-based system justifies more flexible engagement on technology transfer, without undermining U.S. export controls.

What does this mean for businesses in Singapore

Pharmaceutical and technology companies based in Singapore, especially those exporting to the U.S., should closely track the progress of these negotiations. Tariff relief could significantly lower manufacturers’ costs, while secure access to U.S. semiconductors and AI technologies would accelerate product development and digital scaling.

For large multinationals, regulatory certainty may influence whether to expand production or R&D activities in Singapore. For SMEs and startups, predictable access to key technologies like high-performance chips could be a critical enabler for scaling.

In a globally integrated economy like Singapore’s, the outcome of these negotiations will shape competitiveness not just in 2025 but over the coming decade.

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