The US’s efforts to reshore production and Trump’s initiated tariffs will spell changes for Singapore’s manufacturing landscape, find RHB Group Research’s (RHB) analysts Barnabas Gan and Laalitha Raveenthar.
The strategic pivot coming out of Capitol Hill, in the form of major legislative initiatives such as the CHIPS and Science Act and the Inflation Reduction Act (IRA), alongside the imposition and expansion of tariffs on imports reflect Washington’s intention to return the semiconductors, advanced manufacturing, electric vehicles (EVs), and pharmaceuticals sectors back to the US.
Singapore, as a key player in international manufacturing and a hub for high-tech production, faces mounting pressures from shifting investment flows, evolving trade patterns, and rising geopolitical uncertainty.
“The potential redirection of global capital and production back to the US challenges this positioning, especially in sectors where Singapore has built strong capabilities, such as electronics and precision engineering,” write Gan and Raveenthar.
Over the past five decades, the city-state’s economic development has been characterised by a state-led, export-oriented, and manufacturing-centric model, heavily reliant on foreign direct investment (FDI).
Its manufacturing sector, centred in advanced, technology-intensive industries, including electronics, semiconductors, precision engineering, pharmaceuticals and chemicals accounts for around 20.6% of the nation’s gross domestic product (GDP).
See also: AI to help APAC manufacturers navigate uncertainty: Rockwell Automation
Singapore's export orientation is also pronounced, as manufacturing goods account for about 40% of total domestic exports in 2024.
In 2024, the US was Singapore's second-largest market, accounting for 11% of Singapore's domestic exports.
With this, based on the recent US tariff imposition, reciprocal tariffs account for the bulk of the direct tariff impact on Singapore.
See also: iPhone supplier TDK readies batteries geared for thin AI gadgets
The Monetary Authority of Singapore (MAS) further noted that products subject to the baseline tariff of 10% accounted for around 55% of Singapore's domestic exports to the US.
In contrast, products such as semiconductors, consumer electronics and pharmaceutical goods account for about 40%.
The high level of interdependence between Singapore's manufacturing sector and global firms, particularly those in the US, note Gan and Raveenthar, means that long-term shifts in US industrial policy and reshoring efforts have the potential to reshape Singapore’s production footprints and alter investment flows.
With this, the analysts have singled out the electronics and semiconductor industries to be the most at-risk to US reshoring, which they note could lead to a downscaling of orders placed with Singapore-based electronics contract manufacturers.
This, they note, would be significant, with the city-state accounting for 10% of all chips produced worldwide and approximately 20% of global semiconductor manufacturing equipment production.
The medical devices and life sciences sectors are another that could be affected by offshoring, with Singapore being home to all of the top 30 multinational med-tech companies, such as Medtronic, Becton Dickinson, and Thermo Fisher.
Singapore's precision engineering sector, which supports both aerospace and advanced industrial manufacturing, could also experience reduced US demand.
To stay ahead of Singapore and the region’s corporate and economic trends, click here for Latest Section
As aerospace and defence-related manufacturing is often guided by national security and defence procurement standards, firms could relocate parts production, sub-assemblies, and engineering services back to US soil for reasons of both efficiency and national security.
Finally, the pharmaceuticals and speciality chemicals manufacturing segment could also see an impact from reshoring, due to its export-oriented nature.
Gan and Raveenthar add that reshoring efforts typically involve not just relocating manufacturing capacity, but also rebuilding supplier ecosystems domestically or closer to the final consumer.
They write: “As firms restructure operations to minimise the dependency on long and complex international supply chains, Singapore's traditional role in transhipment, consolidation, and cross-border logistics could be diminished.”
Furthermore, the shift toward ‘just-in-region’ strategies, where firms develop parallel supply chains in North America, Europe, and Asia to serve local markets, could present a structural challenge for Singapore, as its logistics and warehousing sectors have traditionally thrived on the economies of scale and inter-regional traffic facilitated by globalised operations.
Another compounding factor, they note, could be the potential loss of regional headquarters functions.
Should companies reconfigure their operations to align with a more localised or US-centric model, strategic functions such as procurement and distribution planning could be relocated closer to home markets, further eroding Singapore's value-added role in global supply networks.
Not all doom and gloom
In spite of the present challenges, Gan and Raveethar still see promising opportunities for Singapore to thrive in the evolving global economic uncertainty.
They explain: “On the other hand, we believe that the US' reshoring efforts could also present strategic opportunities for Singapore, both as a high-value manufacturing hub and as a key partner in global supply chain diversification over the long term.”
Specifically, the analysts note that the city-state could benefit from the ‘China Plus One’ strategy, as a high-value, trusted base for advanced manufacturing and regional coordination.
“Its strengths lie in political stability, strong governance, robust legal and regulatory frameworks, strong intellectual property (IP) protection, and top-tier infrastructure, making it a reliable hub for global companies looking to derisk from China,” write Gan and Raveethar.
These attributes, they note, positions Singapore as a preferred hub for companies relocating capital-intensive or IP-sensitive segments of their production operations.
In particular, Singapore stands to gain in high-tech manufacturing sectors, such as semiconductors, precision engineering, med-tech, and pharmaceutical production, where reliability, quality control, and innovation are critical.
The pair adds: “Moreover, Singapore's extensive network of free trade agreements (FTAs), including the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), enhances its attractiveness as a supply chain command centre.”
Meanwhile, Singapore continues to strengthen its position in high-value, knowledge-intensive manufacturing.
According to the Economic Development Board (EDB), $11.1 billion in fixed asset investments (FAI) was secured for the country’s manufacturing sector in 2024, with a significant share directed towards semiconductors and biomedical manufacturing.
At the same time, the nation recorded a 5.6% y-o-y increased in total FDI inflows to $192 billion, a 5.6% y-o-y increase, with the manufacturing industry remaining one of the top five key recipients, while stocks with manufacturing FDI reached $279.9 billion in 2023.
In precision medicine, Singapore has also attracted several key investments, including AstraZeneca's first end-to-end antibody-drug conjugate (ADC) manufacturing facility, which enhances capabilities in innovative cancer therapeutics.
Cautious sentiment to drive government bonds
Amid tariff uncertainty and heightened Middle East tension, Gan and Raveenthar believe that Singapore government securities (SGS), as a ‘safe haven’, will continue to benefit from high demand from investors.
SGS, they write, benefit from the government's high level of governance transparency, fiscal prudence, and its pro-business policy.
They recall that in 2010, Singapore's GDP recorded double-digit growth at 14.5%, significantly higher than the growth rate of other major economies, as most were still reeling from the effects of the GFC.
This, in turn, spurred a positive sentiment towards Singapore assets, with the SGS 10-year trending lower at a range of 1.29% to 1.61% (Figure 18), reflecting high inflows into Singapore from 2011 to 2012.
“SGS yields continued to be on the downside bias during the Covid-19 pandemic era, in which the 10-year yields were comparable to those of US treasury bonds (UST) 10-year yields, as traders flocked to safety due to heightened cautious sentiment,” write Gan and Raveenthar.
In 2025, the UST 10-year yield spiked up to 4.5%, largely due to the effects of Trump's tariff uncertainty, concerns about the US debt level, as well as downside sentiment on waning US exceptionalism and de-dollarisation.
In spite of this, the SGS 10-year yield has trended lower since the start of the year, with the bond rally largely supported by traders' flight from US assets.
On a year-to-date (ytd) basis, SGS 10-year yield has dropped by 57 basis points (bps) to 2.28%, with the spread between UST and SGS widening to around 206 bps.
On this, the analysts write: “Despite the US reshoring push, we maintain a downside bias for Singapore SGS yields, as persistent global uncertainties continue to drive strong demand for safe-haven assets.”
Overall, while the pair sees that US reshoring efforts could partially erode Singapore's traditional manufacturing advantages, they do not diminish the nation’s overall strategic relevance.
They write: “By leveraging its robust infrastructure, strategic location, and pro-business environment, Singapore can reposition itself as a critical node in the evolving global supply chain.”
“Though challenges remain, Singapore is well-placed to adapt and thrive as a future-ready, innovation-driven hub in the new global manufacturing landscape,” conclude Gan and Raveenthar.
