‘Nothing we can do’: Singapore businesses stung by higher 12.5% US tariff

SINGAPORE – Local entrepreneur T.K. Khor has for decades been in the business of connecting US customers to original equipment manufacturers fabricating everything from metal parts to precision machines in markets such as China.

US President Donald Trump’s tariffs have been a blow to his operations, with export taxes on products from China surging to as much as 89 per cent, after a new 12.5 per cent levy took effect last week.

But Khor, owner of Singapore-based Outsource Asia Industries, told The Straits Times that he is no longer reacting to every change in tariff rates, which at one point surged to more than 100 per cent on made-in-China goods.

He said the Trump administration’s tariffs salvo has already cost him a chunk of business, as some customers were not willing to take on the higher costs.

“Last time, I (would) do about US$8 million (S$10.3 million) in business. This year, I’m doing probably US$2 million to US$3 million tops,” Khor said.

He added: “When the tariffs first started, we were worried. Now that our business has been lost, it doesn’t really affect us.

“The damage has been done. There is nothing we can do.”

A US Federal Register notice published on July 23 listed China and Singapore among 45 economies that will face a 12.5 per cent duty following a probe by the Office of the US Trade Representative (USTR) into forced labour concerns.

The USTR investigation – which started in March and concluded in July – claimed that these economies had failed to both adopt and effectively enforce prohibitions on trade in goods produced with forced labour.

Singapore’s Ministry of Trade and Industry said the new tariff took effect at 12.01am Eastern time on July 24 in the US.

About a third of Singapore’s domestic exports to the US are now subject to the Section 301 export tax, that replaces a 10 per cent global levy under Section 122 which expired last week.

Some exports will remain exempt, such as energy and energy products, pharmaceuticals and pharmaceutical ingredients, semiconductors, and metals used in currency and bullion.

Singapore has rejected suggestions that it engages in unfair trade practices, including the use of forced labour in supply chains, and has told the US that it does not condone such practices.

Association of Small and Medium Enterprises president Ang Yuit told ST the latest tariff “will be an operational squeeze for those in traditional sectors, but a clear advantage for high-tech exporters and trade service providers”.

He added: “Those in precision engineering, industrial tools, custom machinery, and speciality chemical face an immediate 2.5 per cent price disadvantage against competitors in Malaysia taxed at 10 per cent.

“US buyers will demand price cuts or shift orders across the border for cases if the demand is elastic.”

However, Ang believes services companies will see increased demand for their compliance offerings because the tariff targets forced labour, benefiting trade lawyers, supply chain auditors, environmental, social and governance consultants, and logistics firms specialising in mapping how products are classified.

He said more foreign companies could also choose to set up their regional headquarters in Singapore, instead of considering less-regulated neighbours, because of US scrutiny.

Ang added that many small and medium-sized enterprises were still “waiting for the ripple effect” of the latest tariff to settle.

Sunbeam Aquarium, which exports ornamental fish to the US, is another local firm facing an increase from 10 per cent to 12.5 per cent in tariff. The company’s senior manager Nicole Chin said it was still too early to assess the impact of the higher tariff on its business, while declining to provide the percentage of its sales that can be attributed to the US.

Chin said: “For ornamental fish, reliability of supply and product quality are also important considerations.

“The effect of tariff changes will depend not only on the tariff rates themselves, but also on how they compare across exporting countries, and whether the difference is large enough to influence importers’ sourcing decisions.”

Other companies have seen the impact of US taxes on their business margins.

Fast-fashion retailer Shein in a financial filing on July 26 disclosed a US$99 million loss in the first quarter of 2026, in a swing from a net income of US$395 million a year earlier.

The Singapore-headquartered company, which was founded in China, said products sold by it or through its marketplace and shipped to the US were now subject to tax rates ranging from 10 per cent to 87.5 per cent. This was partly due to a removal of an import duty exemption on small packages.

The Singapore Business Federation on July 24 said “clear guidance and adequate transition periods” will be critical to helping businesses comply with any new regulatory requirements.

Lennon Tan, president of the Singapore Manufacturing Federation, has said the impact of the 12.5 per cent tariff on manufacturing companies will be real.

He added that the association was surveying affected exporters, particularly those with significant US exposure, to quantify the impact and channel their concerns to the Government.

Khor hopes Trump’s upcoming meeting with Chinese President Xi Jinping at the White House will be a turning point for his business.

He said: “We were hoping for something concrete from their last meeting in May, but there was nothing at all.

“Hopefully, there will be some good news in September.”