SGD Under Pressure: Tariffs, Policy Shift Hit Singapore

Singapore’s economy in 2025 is grappling with significant headwinds from U.S. tariffs, which threaten to disrupt its export-driven growth and increase living costs for its citizens. The tariffs, including a 10% baseline on all imports and potential additional levies on key sectors like pharmaceuticals and semiconductors, are expected to dampen demand and strain corporate profits. Coupled with a weakening Singapore dollar, currently trading at approximately 1 SGD = 0.778 USD, these pressures could elevate the cost of imported goods, impacting household budgets. However, the government’s Budget 2025 provides a robust framework to support Singaporeans through direct financial assistance, enhanced retirement savings, and upskilling opportunities. By strategically leveraging these measures and adopting prudent financial practices, Singaporeans can navigate this challenging economic landscape with confidence.

The introduction of U.S. tariffs in 2025 has cast a shadow over Singapore’s economy, which relies heavily on international trade, with exports accounting for a significant portion of its GDP. The U.S., Singapore’s second-largest export market, has imposed a 10% baseline tariff on all imports, with higher rates for certain countries and potential additional levies on pharmaceuticals and semiconductors—key pillars of Singapore’s economy. The Monetary Authority of Singapore (MAS) has warned that these tariffs will create a “broader negative income and demand shock,” affecting corporate incomes and constraining aggregate demand. Prime Minister Lawrence Wong has acknowledged that while Singapore may avoid a recession, its GDP growth forecast has been downgraded to 0–2% for 2025, reflecting the severity of the challenge.

To counter the economic challenges posed by U.S. tariffs, the Singapore government has rolled out a comprehensive set of measures in Budget 2025, announced on February 18, 2025, by Prime Minister and Minister for Finance Lawrence Wong. These initiatives are designed to provide immediate financial relief, support families, enhance retirement savings, promote upskilling, and encourage investment, offering Singaporeans multiple avenues to bolster their financial resilience.

Budget 2025 includes a range of vouchers and rebates to help Singaporeans manage rising costs. All Singaporean adults aged 21 and above will receive SG60 vouchers worth S$600, with seniors aged 60 and above receiving S$800, usable at heartland merchants and hawkers. Households will benefit from S$800 in Community Development Council (CDC) vouchers, disbursed in two tranches—S$500 in May 2025 and S$300 in January 2026—to offset daily expenses. Eligible HDB households will see their U-save rebates doubled to S$760 to ease utility costs. Additional support includes an SG60 ActiveSG Top-up of S$100 for all ActiveSG members, an SG Culture Pass of S$100 for those aged 18 and above, and Climate Vouchers providing S$400 for HDB households (including a S$100 top-up) and private property households. These measures offer immediate financial relief, helping Singaporeans stretch their budgets amidst economic uncertainty.

Families are a key focus of Budget 2025, with enhanced measures to alleviate the financial burden of child-rearing. Parents will receive S$500 in LifeSG credits for each child aged 12 and below, while young Singaporeans aged 13 to 30 will get a S$500 top-up to their Edusave or Post-Secondary Education Account (PSEA). For larger families, the Child Development Account (CDA) First Step Grant has been increased by S$5,000 for third and subsequent children born on or after February 18, 2025. Mothers with three or more children will receive a S$5,000 Large Family MediSave Grant, and families with third and subsequent children aged 1 to 6 will receive S$1,000 per year in LifeSG credits. These initiatives not only ease immediate financial pressures but also support long-term family planning, encouraging family formation in a high-cost environment.

To enhance retirement adequacy, Budget 2025 introduces significant changes to the Central Provident Fund (CPF). From January 2026, employees aged 55 to 65 will see their CPF contribution rates increase by 1.5%, with the entire increase allocated to their Retirement Account (RA) to bolster long-term savings. Additionally, the CPF Special Account (SA) will be closed for members aged 55 and above starting in 2025, with existing SA savings transferred to the RA. These changes ensure that a larger portion of CPF contributions is directed towards retirement, providing greater financial security for older Singaporeans. For those nearing retirement, understanding these changes and optimizing CPF allocations will be crucial for maximizing returns.

Recognizing the importance of continuous learning in a rapidly evolving job market, Budget 2025 invests heavily in upskilling. Singaporeans aged 40 and above can access a S$300 per month training allowance for part-time training. The SkillsFuture Level-Up Programme provides an additional S$4,000 in SkillsFuture credits, along with monthly training allowances of S$3,000 for full-time and S$300 for part-time training. Companies are supported through the new SkillsFuture Workforce Development Grant, offering 70% funding for training costs, up to S$10,000 in credits for firms with three or more employees. These measures are particularly relevant for sectors like technology, healthcare, finance, and manufacturing, where demand for skilled workers is expected to grow, helping Singaporeans stay competitive in a challenging job market.

Budget 2025 also promotes investment opportunities to support personal finance portfolios. Tax incentives for companies listing on the Singapore Exchange (SGX) are expected to enhance market liquidity, potentially boosting the performance of Singapore REITs (S-REITs) and other equities. For Singaporeans, this presents an opportunity to diversify investments and achieve higher returns, particularly through platforms offering access to diversified portfolios like Core Equity100 or Core Growth. These incentives align with Singapore’s goal of maintaining its position as a financial hub, offering investors a chance to capitalize on local market growth.

To navigate the economic uncertainties brought by U.S. tariffs and a potentially weaker Singapore dollar, Singaporeans should adopt a multi-faceted approach to personal finance. The following strategies can help maximize the benefits of Budget 2025 while preparing for potential challenges.

Long-term financial planning is more critical than ever in the face of economic uncertainty. The CPF changes in Budget 2025 emphasize retirement adequacy, with increased contribution rates for older workers and the closure of the Special Account directing more funds to the Retirement Account. Singaporeans should aim to reach the Full Retirement Sum (FRS), which for 2025 is S$213,600 for those turning 55, to secure higher interest rates of up to 4% per annum. Optimizing CPF funds through approved investment schemes, such as bonds or unit trusts, can further enhance returns, though careful consideration of risk is necessary.

​As Singapore navigates the economic challenges posed by U.S. tariffs and a shifting global landscape, Budget 2025 provides a robust framework to support personal financial resilience. By leveraging direct financial assistance, enhancing retirement savings, investing in skills development, and making informed investment decisions, Singaporeans can mitigate the impact of economic headwinds. Key considerations include using vouchers and rebates strategically, budgeting to manage rising costs, and diversifying investments to balance risk and return. Looking ahead, staying informed about economic developments, such as potential further tariff escalations or MAS policy shifts, will be crucial. With prudent planning and proactive engagement with government support, Singaporeans can not only weather the current storm but also build a secure financial future.