Singapore's new grant signals the need to adapt to tariffs, not just ride them out
Even as talks continue over so-called 'reciprocal tariffs' and sector-specific ones, countries and companies are prepared for an inescapably changed trade landscape. If nothing else, the US shows no intention of lifting the global 10 per cent tariff that it has imposed unilaterally.
This dual stance of negotiation and preparation was clear in last Thursday's (Jul 10) press conference by the Singapore Economic Resilience Taskforce, set up in April in response to Trump's tariffs.
Deputy Prime Minister Gan Kim Yong is heading to the US later this month for trade talks, with a focus on the Republic's pharmaceutical exports.
In the meantime, a grant for tariff-affected businesses is in the works. To be launched by October this year, the aim is not to provide relief. Rather, it is to support businesses to 'adapt to the new tariff environment', as stated in a media release.
The grant's long-term orientation reinforces a warning that political leaders have repeatedly made: The world has changed. Trump's tariff crisis is not just a passing bout of turbulence that companies can ride out, but part of a more fundamental shift in global dynamics.
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Meanwhile, the grant's focus on adapting – with its very name being the Business Adaptation Grant – underlines the need for companies to not simply buckle in for a rough ride, but actively change in pursuit of better prospects.
Businesses that export or have overseas operations, and are affected by tariffs, can tap the grant for advisory in free trade agreements and trade compliance; legal and contractual issues; and supply chain optimisation and market diversification.
Meanwhile, manufacturers can get support for 'reconfiguration costs', such as costs associated with logistics and holding inventory.
Not small change
The grant will provide co-funding of up to S$100,000. While the sum may seem modest to some, it is far from negligible for small and medium enterprises (SMEs) – arguably its target audience.
Indeed, the grant allocation will be 'more generous' for SMEs, as Manpower Minister Tan See Leng noted at the taskforce press conference.
Beyond the practical aim of providing support, the grant may also play a persuasive role.
First, the grant is being introduced in October and will be valid for two years.
This two-year window is to provide 'some form of reassurance for businesses that, should there be a protracted period of negotiations, it would cover that length', said Dr Tan.
But it also suggests, therefore, that the government sees a risk that negotiations might take that long – implying two years of tariff uncertainty.
Secondly, the very fact that a grant is being introduced should suggest – not least to SMEs – the importance that the government places on such action.
Granted, other government schemes have been underutilised before, such as SkillsFuture credits for individuals to get trained. The government's sense of urgency may not always be shared by the intended audience.
But if nothing else, the specificity of this grant should dispel any lingering illusions that companies can simply wait passively for the tariff storm to pass.
Larger companies, that can afford their own risk and compliance teams, have undoubtedly been making their own calculations about how to respond to the trade environment. The upcoming grant is a clear push for SMEs, too, to take action.
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