According to a US Federal Register notice published on July 23, the Section 301 tariff replaces a previous 10 per cent global levy under Section 122. While Singapore’s Ministry of Trade and Industry has formally rejected allegations of unfair trade practices and forced labour in its supply chains, the operational reality for local exporters remains challenging. The new duties now cover approximately one-third of Singapore’s domestic exports to the United States.
Sector-Specific Impacts and Supply Chain Shifts
The impact of the tariff is uneven across industries. Ang Yuit, president of the Association of Small and Medium Enterprises, noted that the tariff creates an immediate 2.5 per cent price disadvantage for Singaporean exporters in sectors such as precision engineering, industrial tools, custom machinery, and specialty chemicals when compared to regional competitors like Malaysia. For businesses with elastic demand, this margin squeeze may force companies to lower prices or risk losing orders to competitors in jurisdictions with lower tariff exposure.
Conversely, some industry observers suggest the increased US scrutiny might drive demand for compliance-related services. Supply chain auditors, trade lawyers, and ESG (Environmental, Social, and Governance) consultants are expected to see a rise in business as firms scramble to map their supply chains and ensure compliance with US standards.
The Human and Corporate Cost
For individual entrepreneurs like T.K. Khor, owner of Outsource Asia Industries, the cumulative effect of shifting US tariff policies has been significant. Khor reported a substantial decline in business volume, noting that the ongoing trade tensions have resulted in a loss of customers who are unwilling to absorb the rising costs. Other firms, such as Sunbeam Aquarium, are currently assessing the long-term viability of their US export strategies, with senior management emphasizing that the final impact will depend heavily on the competitive landscape of their respective markets.
Large-scale enterprises are also feeling the pressure. Shein, the Singapore-headquartered retailer, reported a US$99 million loss in the first quarter of 2026, citing in part the removal of import duty exemptions on small packages and tax rates on US-bound shipments that have surged as high as 87.5 per cent.
The Singapore Business Federation has called for clear guidance and adequate transition periods to help businesses navigate these regulatory shifts. As the manufacturing sector surveys its members to quantify the impact, many firms remain in a state of uncertainty, waiting for the ripple effects of the new duties to stabilize.