Singapore firms brace for US tariff fallout as costs set to rise

[SINGAPORE] According to a flash survey conducted by the American Chamber of Commerce (AmCham) in Singapore, nearly half (45%) of companies questioned plan to pass on extra costs from new US tariffs to their customers.

Other businesses plan to respond by diversifying their supply chains to lessen their reliance on high-tariff markets, or by exploiting opportunities to win market share from competitors who are reluctant to adjust, AmCham Singapore stated on April 2.

The new tariffs are part of a broader US trade policy shift aimed at protecting domestic industries and addressing perceived imbalances in global trade. Analysts note that while the measures may bolster US manufacturing, they could also trigger inflationary pressures and disrupt long-established supply chains, particularly in export-dependent economies like Singapore.

More than two-thirds of the 36 respondents polled flagged potential reciprocal tariffs on countries taxing US imports as the most significant concern for their business – over existing trade measures. Nearly seven in 10 (69 per cent) said they expect the new tariffs to have a significant or moderately negative impact on their operations.

The ripple effects of these tariffs extend beyond direct trade costs. Industry experts warn that businesses may face delays in shipments due to increased customs scrutiny, as well as higher administrative burdens in navigating complex tariff classifications. Smaller firms, in particular, could struggle to absorb these additional operational challenges.

The survey findings were released ahead of the White House's planned announcement on April 2 in Washington, revealing sweeping reciprocal duties on America's trading partners, with Asian economies bearing the brunt of the burden.

Singapore's imports to the US will be subject to the "baseline" 10% tax on all goods entering the US from anywhere in the globe. Imports from approximately 60 trade partners identified by the White House as the "worst offenders" will be subject to increased tariffs.

Regional trade experts suggest that companies should explore free trade agreements (FTAs) as a potential buffer against tariff hikes. Singapore, for instance, has a longstanding FTA with the US, which could provide some relief for qualifying exports. However, stringent rules of origin requirements may limit the benefits for certain products.

In the AmCham study, around 20% of respondents said they thought the restrictions will have no impact on their business.

Mr. Frank Debets, Asia-Pacific customs and trade leader for PwC Singapore, disagreed. He stated that it would be "surprising" if companies reporting no impact were completely immune to the knock-on consequences.

For example, he stated that their suppliers and customers may be impacted, limiting their ability to buy or sell goods or services, or they may be targeted by retaliatory measures elsewhere.

Beyond immediate financial implications, the tariffs could accelerate a broader decoupling of US and Asian supply chains. Some multinationals are already reevaluating their regional footprints, with Vietnam and India emerging as alternative manufacturing hubs. This shift may reshape trade dynamics in the coming years, even if tariffs are eventually scaled back.

“It would be wise for anyone who believes the tariffs do not impact them to perform the necessary due diligence to ensure that their belief is well-founded,” he added. The flash poll was jointly conducted by AmCham Singapore, BowerGroupAsia Singapore and PwC Singapore. The responses were gathered between March 3 and 10.