Tariffs pressure Singapore manufacturing supply chains
Compliance gaps heighten risks as shifts loom.
Tariffs are rising for Singapore’s manufacturing and supply chains, with orders declining for four straight months since February 2025, intensifying pressure on exporters and firms embedded in U.S.-bound supply chains.
The key risk, industry speakers said, is not only higher duties but also growing exposure to compliance gaps that can trigger penalties and disrupt shipments ahead of the next wave of tariff shifts.
Shafiqah Abdul Samat said Singapore manufacturers are most exposed in high-value sectors. “Singapore manufacturers are exposed in high value sectors, typically semiconductors and also pharmaceuticals, but the country's transshipment hub status cushions some of these effects,” she said.
For semiconductors, while U.S. tariffs on advanced chips may have limited immediate impact, “there remains some indirect exposure due to Singapore's significant role in semiconductor, packaging, assembly, and testing.”
She added that the U.S. remains a major market. “The US remains as a key export destination, accounting for about 13% of Singapore's domestic exports to the US,” she said, noting some manufacturers built inventory in 2025 ahead of tariffs, signalling reliance on U.S. demand.
Abdul Samat warned that “reciprocal tariff policy may raise Singapore baseline tariff, which is existing only at 10% and also taking into consideration penalties up to 40% if goods are deemed to have been transshipped to evade tariffs.”
Kala Anandarajah of Rajah & Tann Singapore said exposure runs through both direct sales and regional production networks. “Singapore manufacturers are very exposed, particularly manufacturers with strong US end markets or links into US, bound regional supply chains will be significantly exposed,” she said. “We're looking at direct exposure and we're looking at indirect supply chain related exposure.”
She pointed to the shift from earlier preferential treatment to new tariff regimes. “With the Liberation Day tariffs that kicked in even where products which had zero rates were now subjected to various levels,” she said.
“Over the last few days, the Trump administration has indicated that they will increase this bail baseline rate to 15% or more,” adding that the key question is whether this will have “a major impact on businesses in Singapore.”
She also warned that pressure can spread beyond direct exporters. “As a final point on this, even sectors without a huge direct export to the US can feel pressure simply because of delayed orders cost increases on intermediate goods. So it's indirect, and the implications can be severe.”
Compliance failures are emerging as a critical vulnerability. Abdul Samat said “compliance gap, often these stems from operational blind spots,” highlighting transshipment risk where firms “may overlook rules penalising goods routes through Singapore to bypass tariffs.” She also cited “hidden compliance triggers” that can arise through shipping terms, inventory flows and pricing structures.
Anandarajah said the new rules raise the stakes around product identity and origin. “The slip ups have potentially increased, and some of the biggest slip ups include misclassification of goods,” she said, explaining that different markets apply HS codes at different digit levels, increasing error risk.
“This one requires very careful analysis and thinking the issue through, in short, country of origin,” she said, adding: “Singapore takes misclassification of country of origin very strictly as well.” She also flagged “a misunderstanding of the tariff exclusion list.”
To prepare for the next wave of tariff shifts, Abdul Samat urged stronger scenario planning, close monitoring of policy and regulatory changes, and diversification across suppliers and markets, while Anandarajah stressed “understanding the classification of your products” and tracking shipment, cost and demand data.
