Singapore retailers facing tough choices amid US tariff hikes

New Paper

25-04-2025

Local collectibles company Mighty Jaxx felt the immediate impact of the tariffs on its shipments currently on the way to the US.
"These shipments would be hit with the required tariffs upon landing in the US," said Mr Victor Tan, chief investment officer of Mighty Jaxx.
As the US moves ahead with a new round of tariffs, Singapore-based retailers with a presence in the US or deep ties to US supply chains are facing rising uncertainty, said Dr David Leong, managing director of PeopleWorldwide Consulting.
On April 2, US President Donald Trump imposed sweeping tariffs on many countries before announcing a 90-day halt on reciprocal tariffs about a week later.
The pause came into effect on April 10 and lifts on July 9, a White House order showed.
Meanwhile, after multiple rounds of escalating tariffs, the current tariff rate on China stands at 145 per cent, while China's retaliatory tariffs on the US stand at 125 per cent.
Dr Leong said: "For Singaporean retailers operating here, there are fewer concerns, as Singapore does not have reciprocal tariffs on US imports, and trade with the rest of the world remains business as usual."
Mr Tan said that while the tariffs will definitely have some impact on Mighty Jaxx's US business, its key sales regions of Europe, Middle East and Africa, South-east Asia and North Asia still have increasing demand. "We foresee them supporting our sales growth this year," he said.
"While the uncertainty in the US' policies has not allowed Mighty Jaxx to make any long-term plans with regard to its business operations and strategy, we have currently put certain short-term measures in place to ensure that our customers in the US continue to have the ability to purchase our products, albeit with some potential changes in pricing to reflect the evolving tariff situation," he added.
"(In the) longer term, we will continue to monitor the evolving tariff situation and adjust our strategy."
For Singapore retailers operating in the US, imposed tariffs are expected to raise the cost of imported goods, leading to compressed profit margins or higher prices on their products in the US.
Mighty Jaxx, a local collectibles company founded by Mr Jackson Aw (pictured), felt the immediate impact of the tariffs on its shipments currently on the way to the US. PHOTO: UIP
This is likely to impact price-sensitive sectors such as luxury apparel and household products, where consumers may shift to more affordable alternatives, said Ms Shafiqah Abdul Samat, principal adviser leading the trade and Customs team at KPMG in Singapore.
"The weakened consumer demand in these categories could exacerbate competitive pressures, especially from US-based retailers or competitors from tariff-exempt countries that can maintain cost advantages," she said.
Countries that have escaped Mr Trump's global tariffs include Russia, North Korea, Cuba and Belarus.
Ms Shafiqah said disruptions in supply chains and increased operational costs associated with adjusting sourcing strategies may further disadvantage Singapore retailers selling products to the US against their more established or locally integrated peers.
Home-grown leather goods brand Tocco Toscano, which has been marketing to US customers online since 2019, has been impacted by the tariffs.
The company decided to slightly reduce its budget on advertising on social media platforms such as Meta, Instagram and TikTok, as well as Google ads directed at US customers.
"(The tariffs) will probably affect our business, but to a very minor extent since our US sales constitute a very small percentage of total sales," said a Tocco Toscano spokesperson.
But as Tocco Toscano's production originates in China, the significant tariff of 145 per cent on these goods will probably deter some US customers from purchasing its products, the spokesperson added.
"(We will also) continue to monitor and adjust this budget based on how US online sales conversions are affected by the implementation of the tariffs. In addition, initial plans to launch offline channels like physical stores will be pushed further back."
The full effects of the tariffs would take time to ripple through the system, but the early warning signs are already flashing red as the unprecedentedly high tariffs have confused the markets, Dr Leong said.
Retailers operating physical stores in the US or sourcing goods that transit through US channels will begin feeling the pinch within one to two quarters, he said.
"Inventory costs will rise, margins will tighten, and operational complexity will increase. US consumers would end up paying high prices for most consumables unless they are made in the US," Dr Leong said.
The timeline for consumer impact is expected to stretch over six to 12 months, as existing inventories are sold and new, lower-cost goods enter the system, he said.
Dr Leong added that the issue is consumers' confidence and buying appetite.
Mr Joel Leong, co-founder of ShopBack, said customers' sentiments are the fastest to change.
"We suspect there'll be changes in how people shop for big basket-sized items. While they will still want to spend on items like travel and luxury items, they may be more eager to find good deals and promotions that can give them some savings," he said.
Dr Leong said Singapore retailers who double down on e-commerce, localised manufacturing and regional diversification will be the ones most resilient in the face of these global trade shocks.
He said: "Singapore retailers must now move beyond reactive tactics and embrace long-term strategic shifts.
"As the global trade environment becomes more politicised, companies that are nimble, diversified and digitally enabled will have the upper hand - not just in weathering tariffs, but also in building sustainable growth models in an increasingly fractured world."