Singapore Deputy Prime Minister Gan Kim Yong ruled out any immediate retaliation after the US imposed a 10% baseline global tariff, indicating officials will seek talks over levies which threaten to have a “significant impact” on the city-state’s economy.

“We are naturally disappointed,” Gan, who is also minister for trade and industry, told reporters on Tuesday. He cited the two nations’ traditionally close ties, and a longstanding free trade agreement with the US that has mutually benefited both sides.

Under the FTA Singapore can take countermeasures, “however, we have decided not to do so” because retaliatory import duties will just add costs for Singapore, he added.

Singapore will be subject to the minimum universal tariff on all exports to the US, though the city was spared the higher levies inflicted on some countries, including a total of 54% on China and 46% on Vietnam. But as an open, trade-oriented financial center, Singapore’s likely to also feel an indirect impact, particularly if other countries respond with tariffs of their own.

Singapore has to be “prepared for rough waters ahead,” he said, adding the government will continue to monitor the situation, and — if necessary — “introduce more measures to help our households and our businesses.”

He also said Singapore will have to reassess the outlook for the economy, which was expected to slow even before Trump inflicted the new levies. In February, the city-state forecast growth of 1%-3% this year, down from 4.4% in 2024.

“I’m not saying we will definitely revise it downwards, but I think the situation has turned out to be worse” than we had expected, “and therefore it is necessary for us to revisit our assumptions,” he said.

Prime Minister Lawrence Wong had already set aside nearly S$124 billion ($93 billion) in the 2025 fiscal year for everything from airport upgrades to measures to address rising living costs, including supermarket vouchers and utility rebates.

Gan’s late afternoon comments came after the Monetary Authority of Singapore said it’s assessing the implications for the local economy. MAS “stands ready to curb excessive volatility” in the local currency, the central bank said.

The tariffs on Southeast Asia were more “draconian” than feared, economist Tamara Mast Henderson wrote in a note for Bloomberg Economics, with Vietnam hit the hardest. “Growth in Malaysia, Thailand and Singapore – where US exports amount to 8%-12% of GDP — will also get hammered,” she wrote in a note Thursday.