Assessing Impact of New 12.5% Tariff Imposed by the US and Measures to Help Affected Exporters

41 Mr Yip Hon Weng asked the Deputy Prime Minister and Minister for Trade and Industry (Trade) (a) what assessment has the Ministry made of the impact of the new 12.5% tariff imposed by the US on approximately one-third of Singapore's exports to the US; and (b) whether the Government will introduce additional measures to help affected exporters diversify markets, strengthen supply chain resilience and preserve Singapore's competitiveness.

Mr Gan Kim Yong: The USTR has concluded its Section 301 investigation into imports associated with forced labour. It has imposed tariffs ranging from 10% to 12.5% on all 60 economies covered by the investigation. The tariff level depends on whether an economy has introduced a prohibition on imports produced with forced labour or has committed to do so through an Agreement of Reciprocal Trade (ART) with the US.

Singapore was assessed at the 12.5% tariff rate because we do not have a law prohibiting the importation of goods produced with forced labour nor an ART committing us to introduce one. Importantly, none of the 60 economies, including those that already have such prohibitions in force, received a full exemption from the tariff.

About one-third of Singapore's domestic exports to the US, worth about S$9.5 billion annually, are affected. These include optical instruments and chemical products. The tariff does not apply to energy and energy products, certain electronics and certain aerospace products. Products subject to the US' Section 232 tariffs or investigations, such as pharmaceuticals and semiconductors, are also excluded from the Section 301 tariff. Overall, compared to the earlier Section 122 tariff of 10%, the new measure raises Singapore's overall effective tariff rate by an estimated 0.7 percentage point.

Throughout the investigation, Singapore engaged the USTR actively at both the political and official levels, including during my visit to Washington DC in April this year. We also submitted written comments to the USTR and participated in bilateral government consultations.

In these engagements, we made clear that there is no evidence that Singapore is involved in the trade of goods associated with forced labour, based on data from the US Department of Labour and Customs and Border Protection. We emphasised that our policies do not burden US commerce, as reflected in the longstanding and substantial trade surplus the US continues to enjoy with Singapore. We also explained that Singapore does not condone forced labour and maintains a comprehensive enforcement framework against such practices.

Some Members asked what Singapore can do to negotiate a lower tariff with the US. We will continue engaging the USTR constructively. But we also have to consider carefully what steps, if any, Singapore should take in response. Singapore is a major trading hub, with goods and services trade amounting to around S$2.5 trillion each year, of which S$1.4 trillion is in goods. Any import prohibition would have significant implications. Businesses could face substantial compliance costs arising from supply chain due diligence, documentation and investigations, particularly where production takes place outside Singapore and beyond our jurisdiction. Such measures could also affect our broader trade relationship with other partners. In addition, we have to consider carefully what would be involved in an ART with the US. Based on the agreements that the US has concluded with other economies, such arrangements may involve commitments beyond an import prohibition, including export controls or restrictions relating to third countries. These wider implications have to be assessed carefully before Singapore decides on any course of action.

Our immediate priority is to help businesses and workers adjust. We have therefore been engaging the business community to better understand their concerns. As the Singapore Business Federation noted in its recent statement, any new regulatory requirements should be carefully studied in consultation with industry. We will continue these discussions through the Singapore Economic Resilience Taskforce.

The Taskforce is also working closely with our tripartite and industry partners to support businesses and workers who may be affected by this new tariff. In October 2025, we launched the Business Adaptation Grant (BizAdapt) to help eligible enterprises adapt their business operations and strengthen supply chain resilience. At this year's Budget, we announced enhancements to existing schemes, including raising grant support levels from up to 50% to up to 70% for internationalisation-related schemes, such as the Market Readiness Assistance grant. To help businesses manage uncertainty and cost pressures, the Government has also recently introduced a one-off SME Cash Grant of $500 per local employee, up to a cap of $2,500 per company, as well as provided time-limited enhancements to the Enterprise Financing Scheme.

For workers, the Government and NTUC's Employment and Employability Institute have expanded career services. The Ministry of Manpower has also launched the Graduate Industry Traineeship programme to help fresh graduates gain industry-relevant experience and transition into full-time employment.

We will continue working closely with businesses and workers, and provide targeted support where necessary. Above all, we will continue to strengthen Singapore's competitiveness and keep our economy resilient in an increasingly uncertain global trading environment.