January 2, 2026
SINGAPORE – Call it “G minus one”, as termed by Nobel prize-winning economist Joseph Stiglitz. Or “the world, temporarily minus one”, as Senior Minister Lee Hsien Loong put it.
These characterisations of a framework for the global economy, minus America, emerged in 2025 after the re-election of US President Donald Trump and an escalation of his tariff policy.
Far from a drive to exclude the US, governments and experts are trying to find a way forward if America continues to abdicate its leadership role in the global trading system, analysts say.
The efforts have unfolded in several ways. Multilateral agreements, including those without US involvement, have drawn interest.
Plurilateral and minilateral initiatives, involving fewer countries, have also been raised by Prime Minister Lawrence Wong as avenues to make progress with like-minded partners on trade and other matters.
PM Wong said in November that Singapore’s preference was still for America to be actively engaged in conversations to shape the direction of global affairs, adding that the US can join in “at any time” when it is ready.
Imagining a ‘new world’
The US carries an outsized influence on trade. It is the world’s largest economy, the biggest importer of goods, and the top consumer market in terms of spending. It has also historically been the driver of the rules-based global trading system.
At the same time, “there is a sense that certain dynamics have fundamentally shifted in the US, and irrespective of who ultimately succeeds Trump, the US will never be fully returning to its historical role as a staunch advocate for free trade and globalisation”, former US trade negotiator Stephen Olson told The Straits Times.
“Countries are therefore wisely trying to diversify trade relationships and envision a trade system without the US,” said Mr Olson, who is a senior visiting fellow at the ISEAS – Yusof Ishak Institute.
“This process will not be quick or easy, and it remains to be seen ultimately what this ‘new world’ will look like or how successful it will be. But there’s really no choice. They have to try,” he added.
The endeavour is especially important for export-reliant economies like Singapore.
The Republic is extremely dependent on free trade for economic growth, said Dr Deborah Elms, head of trade policy at the Hinrich Foundation.
“Singapore will be an interesting perch to watch the evolution of the global trading system. Changes will be felt sharply and steeply here, but the Government also has the capacity and capability that many other governments don’t,” she said.
She is especially keen to see how the European Union and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will work together in 2026.
The EU and the CPTPP, involving 39 countries including Singapore, held their first trade and investment dialogue in November.
Together, the groupings represent 32 per cent of global gross domestic product and 37 per cent of global trade, according to the European Commission.
Despite the lack of US involvement, Dr Elms said that “there is potential here to start thinking about a framework that is fit for purpose for 2026 and beyond” if governments come together to outline trade rules and policies.
The CPTPP has also drawn the interest of more countries. The Philippines and United Arab Emirates made formal applications to join the grouping in 2025. South Korea is also considering the CPTPP as it sees the impact of US tariffs on its exports.
Dr Elms said the Future of Investment and Trade Partnership (FIT-P), launched by Singapore and 13 other small and medium-sized members of the World Trade Organization (WTO) in September, is another platform that could help the Republic tackle challenges in the years ahead.
FIT-P has since expanded to include two more countries, and members have signed a non-binding agreement on supply chain resilience.
A WTO in reform
All this is happening as the WTO, the largest organisation dealing with the rules of trade between nations, undergoes reform.
WTO chief Ngozi Okonjo-Iweala recently called for a change to the organisation’s consensus rule, which requires unanimous agreement among its 166 members to make global trade deals.
Dr Okonjo-Iweala said a new approach is needed, particularly as the global trading system is undergoing its largest disruption in decades.
PM Wong has said that although reforming the WTO is a complex task, there is a general recognition that the organisation is not optimised for current strategic realities.
He added that rules and frameworks established under smaller groupings such as the CPTPP and FIT-P, if successful, “can provide a basis for other countries to join and be part of these platforms, and for us to extend the rules across the board as part of WTO precepts”.
Mr Trump’s administration has described the WTO as “toothless”. The White House’s website, in announcing foreign aid cuts in August, listed US$29 million (S$37 million) in WTO funding as an example of US contributions to international programmes that violated Mr Trump’s “America First” priorities.
The reference was later removed, and a source told the Reuters news agency that WTO funding was no longer being cut, without offering further details.
INSEAD professor of economics and political science Pushan Dutt said a likely scenario facing policymakers is one where the WTO is eroded, but not eliminated.
“There will be a rise in regional and plurilateral arrangements that are highly specific, with local content requirements and anti-dumping provisions,” he added.
Tariff-sensitive world hangs in the balance
Experts widely agree that the global economy has been resilient to US tariffs. However, its future hangs in the balance.
The Trump administration, following negotiations, has lowered tariffs on countries ranging from China to Vietnam in recent months, boosting economic indicators. But tariffs could be raised in the future if a country’s relationship with the US sours.
US tariffs are unlikely to be unwound, even if Mr Trump is no longer in power, because of the political cost of the move at home, former US commerce secretary Gina Raimondo has said.
More countries may also start taxing imports to protect their domestic industries.
“It is unclear whether the relatively restrained activity from everyone else will continue into 2026, or whether many of them will say, if the United States can do it, then so can I,” Dr Elms said.
Singapore currently pays a baseline 10 per cent tariff on its exports to the US. The tariff has already weighed on key exports, which fell by 3.3 per cent in the third quarter from a year earlier. This followed a 7 per cent increase in the second quarter.
The key pharmaceutical and semiconductor sectors, currently exempt from tariffs, also remain vulnerable to taxes.
Enterprise Singapore has narrowed its forecast for growth in non-oil domestic exports (NODX) to around 2.5 per cent in 2025.
The trade agency expects NODX growth to moderate to 0 per cent to 2 per cent in 2026, as the tariff impact materialises and front-loading eases. Front-loading happens when advance orders are made to prepare for the prospect of higher tariffs.
The slowdown in exports will affect the Singapore economy, which grew by 4.8 per cent in 2025. The reading is set to fall to 1 per cent to 3 per cent in 2026, by official projections.
It will be crucial for Singapore to continue to diversify trade and investment relationships within and beyond the region, Mr Olson said.
“The Gulf Cooperation Council holds tremendous potential that has not been fully tapped, as does Latin America.
“This is also a good time to draw closer to countries that have been stalwart supporters of rules-based trade, in particular the EU, Japan, Australia and Canada,” he added.
“But it would be unrealistic to think that these challenging waters can be easily navigated. Things will get worse before they get better.”