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American President Donald Trump’s tariffs on his country’s imports will hurt companies that export their products to the United States. But individual consumers, including those in Singapore, are not spared either.

The Crayola paint set is just one example of how US businesses have been affected by the impact of tariffs, aimed at making made-in-America products more competitive and bringing more manufacturing onshore.

Some US companies have been reticent in public over the impact of tariffs on their businesses. Crayola did not respond to requests from The Straits Times for comments on the issue.

Supply chain logistics platform Flexport told ST that a tariff of 30.1 per cent will be placed on the brush in the Crayola set when it is sent from China to the US, assuming each brush costs less than five US cents (six Singapore cents). It said a tariff of 27.5 per cent will apply if each brush costs more than five US cents.

Other companies have shared their assessments on the impact.

American motorcycle manufacturer Harley-Davidson has estimated that tariffs will cost the company between US$130 million and US$170 million in 2025.

Most of its motorcycles are produced at its factory in the US state of Pennsylvania, before being sent to markets like Singapore.

A spokesperson for the company’s official dealership in Singapore told ST that tariffs are affecting the company because “automotive parts today are generally sourced globally, and Harley-Davidson is no exception”.

The spokesperson did not comment on whether Harley-Davidson was looking to raise the prices of its motorcycles.

Evidence is emerging that a significant part of the higher cost of US imports will be passed on to the US consumer and to US companies who rely on intermediate products from abroad to produce finished goods at home.

The largest exporting companies are frequently big importers of raw materials like steel, aluminium and copper, or parts and components, studies show.

As US exporting companies face higher costs, they will eventually have to raise prices of their products not just for their local consumers but for buyers worldwide.

Most of these companies have been hit by sector-specific tariffs which, beyond metals, include auto parts, lumber, and agricultural products.

The US also placed a 25 per cent tariff on some advanced chips and derivative products in January, as part of a proclamation signed by Mr Trump.

More such tariffs have been threatened by Mr Trump on pharmaceuticals, which will invariably hurt US multinational companies that are after all some of the world’s biggest drugs and electronics producers.

Advocates of tariffs have persistently argued that the import tariffs will help relatively smaller US-based manufacturers. But it appears that these smaller companies are actually the ones bearing the pain of the higher costs tariffs are imposing upon them.

As US tariffs get entrenched in global supply chains, rising costs will push up the prices of their products and eat into their export competitiveness.

A total of 85 countries – including 27 members of the European Union and United States-Mexico-Canada Agreement countries Canada and Mexico – have agreed to tariff rates that are higher than the baseline 10 per cent that more than a dozen other US trading partners, including Singapore, are subject to.

For many countries or territories, US tariffs have dropped since April 2025.
In each region, these are countries that saw their tariffs change from their initial rate.

However, unless specified or agreed in a negotiated deal, no country is exempt from sectoral tariffs that have been announced or threatened. It means the actual or effective tariffs rates for countries can be higher or lower than what was announced by the US.

Since taking office in January 2025, Mr Trump has enacted a growing list of tariffs on imports from specific countries and on some commodities and manufacturing components, ostensibly to fix the longstanding imbalances in international trade and ensure fairness across the board.

He has repeatedly claimed that “tariffs are easy”, given that the US is the world’s largest consumer.

However, the back-and-forth, delays and reversals which have followed the roll-out of tariffs under the so-called “Fair and Reciprocal Plan” on April 2, 2025, show that the tariffs are far more complicated to implement.

Tariffs have also not made a meaningful impact on the global trade imbalance or the US’ overall trade deficit, and the revenue collected from them does not seem to be enough to compensate for the economic loss from access to cheaper imports.

Instead, the stickiness of US inflation, which remains well above the 2 per cent target of the Federal Reserve, the US central bank, needs to be unwound to promote maximum employment and stable prices.

However, the increase in the prices of imported and domestic goods is causing inflation to remain closer to 3 per cent. The imported goods are now subjected to sizeable tariffs, while domestic goods are affected by the increased cost of intermediary goods subject to tariffs.

While many companies, especially large corporations, have tried to absorb most of the higher cost of imports, analysts expect the effect of tariffs on inflation to unfold slowly in the coming months if consumer demand holds up.

A Fed study showed the tariffs implemented on China alone in February and March 2025 had, by May, contributed to a 0.33 percentage point increase in core goods personal consumption expenditures (PCE), and a 0.08 percentage point increase in overall core PCE prices – an indicator of inflation also closely monitored by the Fed.

Adjustment to tariffs has also been blamed for the modest growth in US industrial output in 2025, with durable goods manufacturing growing at its slowest pace in years.

Although the tariff uncertainty kept 2025 turbulent, front-loading of export and import orders ahead of actual implementation of the tariffs, and an artificial intelligence boom that lifted semiconductors and machinery shipments, boosted economic growth worldwide, especially in export-driven economies like Singapore.

But the Republic and most Asian economies are bracing themselves for a tougher ride in 2026 when the full impact of tariffs will be logged in.

The tariff chaos has subsided. But the turbulence tariffs have created is far from over.

Some industries have higher tariffs than others

For instance, exemptions on tariffs for most electronic goods and pharmaceuticals mean that the effective tariff rate for Singapore is 7.8 per cent. It was a full percentage point less in April 2025 before the doubling of US tariffs on steel and aluminium to 50 per cent in June. Steel and aluminium account for 4.1 per cent of Singapore’s exports to the US.

The effective tariff rate on Singapore can go well beyond 10 per cent if tariffs are slapped on semiconductor and pharmaceutical products, given that these sectors are among the top gross domestic product contributors.

The varying rates have created a world map of economies and industries that have a tariff advantage or disadvantage. This is driving a new wave of supply chain rewiring and manufacturing-hub relocation, which in itself is a cost that countries and companies around the world will have to bear.

What lies ahead is a lengthy period over which the cost of tariffs will continue to kick in for industries and eventually consumers worldwide.

Since 2018, when the US-China trade war commenced during Mr Trump’s first tenure as president, businesses worldwide have been developing strategies to manage the impact of geopolitical tensions and supply chain disruptions on their profitability.

Still, the country-specific reciprocal tariffs announced on April 2, 2025 – and modified through the year – heightened uncertainty over the outlook of financial health to an unprecedented scale.

A research centre at Yale University, The Budget Lab, estimates that as at Nov 17, 2025, the US average effective tariff rate rose to 16.8 per cent – the highest since 1935 – from 2.4 per cent before April 2.

Even after accounting for the potential switching to lower-tariffed sources of imports, via supply chain rewiring, the average tariff rate was 14.4 per cent – a massive increase in the cost of doing business, especially for small and medium-sized companies.

While the cost increase is too large for most companies to fully absorb, an immediate price hike could also mean loss of competitiveness and an immediate slump in consumer demand.

Hence, around 51 per cent of US companies affected by tariffs have been working hard not to pass on the full impact to consumers, according to an Economist podcast.

Companies are managing tariff costs through various strategies, including adjusting pricing, optimising supply chains, and utilising legal and regulatory paths to lessen the burden.

These approaches involve a combination of short, medium, and long-term measures to mitigate the financial impact of tariffs and maintain competitiveness.

US consultancy firm McKinsey’s 2025 survey of global supply chain managers found that less than one-fifth of respondents plan to pass on more than 80 per cent of the cost of tariffs.

The ones planning to do so are mostly in the chemicals and automotive sectors, passing on more than 60 per cent of the cost – which so far stands as the highest rate of tariff pass-throughs.

Across all industries in the McKinsey survey, the weighted average pass-through rate was 45 per cent, suggesting that most companies plan to absorb or mitigate the effects of tariffs through other strategies.

Around 30 per cent of respondents in the survey were looking at tariff-specific responses, such as negotiating with suppliers to share tariff-related costs, or applying to governments for exemptions for their industries or specific products.

Most countermeasures follow the same playbook that companies have applied when facing other large-scale disruptions, such as Covid-19 and the Russian invasion of Ukraine.

About 45 per cent who are facing tariff impacts are mitigating the effect by increasing inventories; 39 per cent are pursuing dual-sourcing strategies for components or raw materials; and 33 per cent are developing plans to near-shore or on-shore suppliers.

Most economists believe that supply-chain and inventory countermeasures to manage the impact of tariffs were possible in 2025 as the true burden of the costs was not felt – thanks to the back-and-forth on tariff rates by the Trump administration.

However, with most tariff rates now negotiated and agreed upon, the real cost of the tariffs will become evident in 2026 as most companies try to pass on as much of the costs as they can.

Some large companies – exposed to global supply chains – have already started to test their pricing power.

In May 2025, sportswear giant Nike announced that it will increase prices by US$2 to US$10 across the range of its products – mostly made in Asia – starting in June.

E-commerce analysis company DataWeave estimated in October that the Nike online prices of footwear have risen by 17 per cent, apparel by 14 per cent, and equipment and protection products by 18 per cent.

Even pharmaceutical companies and most electronic device makers – which are so far exempt from sectoral tariffs threatened by Mr Trump but still exposed to tariffs on commodities such as copper – are planning to spread the cost hike to the variety of products they make.

The Singapore economy has been resilient in the face of tariffs and recorded growth of 4.8 per cent in 2025.

Tariffs have also not driven up inflation by official indicators. Core inflation, which excludes private transport and accommodation costs to better represent household expenses, averaged 0.7 per cent in 2025, from 2.8 per cent in 2024.

However, the Monetary Authority of Singapore and the Ministry of Trade and Industry are expecting the indicator to pick up in 2026.

Mr Kok Ping Soon, chief executive officer of the Singapore Business Federation (SBF), told ST that businesses having negative sentiments on the impact of US tariffs have fallen from 81 per cent in April 2025 when broad tariffs were announced, to 57 per cent.

“It is turning out better than feared and our businesses are resilient and adapting to the new environment,” he said.

However, businesses remain cautious about Singapore’s economic outlook, according to an annual SBF survey that polled 553 small and medium-sized enterprises (SMEs) and large businesses.

Around 37 per cent of companies expected the economy to worsen over the next 12 months from October 2025. Meanwhile, 14 per cent of businesses expected the economy to improve.

Mr Kok said this is partially due to the fizzling out of front-loading activities, where orders are made in advance in anticipation of higher tariffs.

There is also uncertainty about whether the pharmaceutical and semiconductor sectors, that account for around 40 per cent of Singapore’s exports to the US, will remain exempt from the tariffs.

Mr Kok added that increased manpower, rental and utility costs have also put pressure on businesses.

Here is what some business owners in Singapore feel about tariffs:

Their sentiments are aligned with a report released by the Monetary Authority of Singapore on Jan 29, which noted that the latest Asian trade data points to a widening gap between technology and non-technology shipments, with the latter “struggling to gain traction as the full impact of US tariffs progressively filters through”.

“Against a backdrop of narrow and uneven growth, the effects of sustained higher tariffs are set to become more pronounced,” said the central bank.

Mr Ang Yuit, president of the Association of Small and Medium Enterprises, said: “The global economy will continue to reconfigure as businesses in countries in different regions – South-east Asia, North Asia, Europe, Africa, North America and South America adjust to new realities and seek new business models that match new realities.”

Mr Kok said that despite the possibility of the US Supreme Court ruling against some tariffs, it is likely that tariffs will stay through other policy options which can be exercised by the Trump administration.

He said: “Businesses will need to continue their efforts in strengthening supply chain resilience through capability building, technology investments, business process re-engineering, and market diversification to remain competitive.”