New US TARIFF REALITY

As the global trade environment grows more uncertain, Singaporean businesses are feeling the pressure to adapt quickly, with 80% of Singapore businesses reported being negatively impacted due to the tariffs disrupting their supply chains and operations. The recent “Navigating US Tariffs” workshop, co-organised by the Singapore Business Federation (SBF) and DBS on 2 June 2025, brought together business leaders for a focused, small-group discussion on real-time challenges and practical strategies arising from the latest US tariff regime.

The event followed the launch of SBF’s Navigating US Tariffs Playbook, a practical framework designed to help companies manage risk, restructure operations and build longer-term competitiveness. 

Kickstarting the event, DBS’s senior economist provided a cautious economic outlook to participants, noting that Singapore’s economic growth will slow in the second half of this year. Front-loaded exports momentum will dissipate, and high tariffs and related uncertainty will drag on trade and business confidence. 

This was followed by an overview of the playbook launched by SBF’s Centre for the Future of Trade and Investment, which outlined a three-phase strategy for businesses: making sense of risk exposure, taking action on supply chains and financing, and planning ahead for long-term resilience.

Rewiring the Supply Chain

The presentations were followed by the highlight of the event, breakout sessions focused on how tariffs were impacting local companies in various sectors.

For companies in manufacturing and logistics, US tariff changes have accelerated the need to rethink geographic exposure and supplier dependencies, with 50% of local businesses¹ depending on the US market, highlighting a critical risk factor and leaving these businesses feeling vulnerable amidst the current crisis.  To mitigate this risk, several participants shared that they had already begun decoupling parts of their US-bound production from the rest of their global operations. 

One solar panel manufacturer, for instance, described how it had built a factory in Texas and structured ownership via a US joint venture, enabling it to qualify for federal subsidies while maintaining brand visibility.

Another apparel firm noted that while its direct exports to the US are modest, downstream impacts are still significant. Their clients, many of whom operate retail stores in the US, are already passing on the effects of tariff negotiations through price-sharing arrangements. 

Many participants voiced concerns that while building production capacity closer to the US is logical in theory, in practice, the absence of supporting supply chain infrastructure remains a major hurdle. Many businesses are also constrained by high fixed costs and long lead times associated with setting up new facilities abroad.

In response, speakers from both DBS and SBF advised against knee-jerk reactions and instead encouraged companies to respond in stages, beginning with immediate steps to stabilise operations, then making structural changes over time based on how the situation evolves.

Financing for Agility

The discussions over financing revealed a similarly complex landscape, 3 in 4 businesses expect revenue to drop and 1 in 2¹ expect cost to rise, leading to 70% of businesses ¹ planning to raise prices in response to the tariffs. Furthermore, while the immediate liquidity impact of tariffs remains muted for some, there is growing awareness that tariff-induced cost inflation, FX volatility and geopolitical instability could strain working capital over the next 6–12 months.

Treasury specialists at the event shared that some clients, particularly those with larger US exposure, are exploring forward FX contracts, credit insurance, and structured trade financing to mitigate risk. The demand for interest rate and FX hedging has also grown, as firms seek to manage both operational and financial volatility more proactively.  

DBS shared that clients have also started tapping into Secure FX, a DBS solution that allows businesses to fix FX rates, an important move as currency swings are making it harder for global businesses to protect their profits.

Another insight was that large firms with regional operations are actively reassessing credit lines to ensure flexibility in the face of increased margin compression. On the SME front, they are hit harder with 1 in 2¹ expecting to see cash flow under pressure and 3 in 5¹ expect themselves to require more working capital. 

Finding the Gaps in Compliance and Market Access

The breakout sessions also highlighted important challenges around trade compliance. In particular, several participants highlighted gaps in local expertise for navigating complex rules of origin and tariff classifications, especially compared to other regional markets where customs brokers play a more hands-on advisory role. 

While Singapore’s streamlined customs processes are generally seen as an advantage, some felt that more could be done to guide SMEs in managing export documentation and regulatory compliance across jurisdictions.

Participants also discussed the risks of being indirectly affected by the tariff fallout even if they do not export directly to the US. For example, goods that pass through Singapore enroute to US buyers, or components manufactured in one country and assembled in another before reaching the US, may be caught in the tariff net. 

In light of these challenges, many firms are turning to Singapore’s expansive Free Trade Agreement (FTA) network to access new markets and reduce dependency on the US. One key action point raised was the need to upskill trade and logistics teams to better navigate FTA requirements and take advantage of preferential tariffs.

A Pragmatic Outlook

While there was no consensus on when or how the current US tariff policies might evolve, there was agreement on the importance of scenario planning. The unpredictability of both the US-China trade dynamic and domestic policy shifts in the US was cited as a reason to remain cautious. 

Instead of immediate overhauls, several participants are exploring phased responses, such as automation in overseas facilities and setting up contingency plans for moving production should the situation escalate further.

What emerged clearly from the discussions was a recognition that the global trading system is unlikely to revert to previous norms. The risk of margin erosion from both tariffs and FX movements is now part of baseline assumptions. Companies are increasingly preparing for this “new normal” by embedding resilience into every part of their operations, from sourcing and logistics to financing and compliance.

As one participant summarised: “We may not be able to predict what’s next, but we can be ready for it.”

Companies interested in practical frameworks to manage these risks can access the Navigating US Tariffs Playbook developed by SBF’s Centre for the Future of Trade and Investment. It offers phased guidance across three horizons: Make Sense (0–3 months), Take Action (4–12 months) and Plan Ahead (12+ months).

Source:
   1. SBF Poll of Businesses Sentiments on U.S. Tariff Changes