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US: Tariff reset offers clarity, but trade uncertainty persists
- US President Trump signed an executive order adjusting “reciprocal” tariffs on 69 countries, effective 7 Aug, with rates ranging from 10% to 41%. Key impacts include lowered tariff rates for ASEAN countries and 10% baseline for Singapore. Investment pledges from the EU and Japan to invest in the US were also announced.
- Transshipment of goods will face a 40% tariff, but details remain unclear and subject to bilateral negotiations. Sector-specific tariffs add to uncertainty, with pending investigations into semiconductors and pharmaceuticals. Singapore may be exposed, as pharmaceuticals made up 35% of its US export value in 2024, up from 24% in 2023.
- Outlook – While tariff clarity has improved, uncertainties around transshipment and sector-specific tariffs persist. The US shift towards bilateral deals has upset the globalization efforts, raise inflation risks and global trade tensions. De-dollarization concerns are growing, though the US dollar will remain dominant for some time. Asia’s export outlook may soften in 2H25 and into 2026, while regionalization accelerates, with ASEAN poised to benefit from initiatives like the Johor-Singapore SEZ and FDI inflows in this uncertain environment.
Tariff reset ahead of 1 Aug deadline
Just ahead of the 1 Aug deadline, US President Donald Trump signed an executive order (“Further Modifying the Reciprocal Tariff Rates” link) on Thu (31 Jul) that modified “reciprocal” tariffs on a number of countries/regions, with updated levies ranging from 10% to 41%. The tariff rates are slated to take effect from 7 Aug. The original “reciprocal” tariff rates were announced on 2 Apr “Liberation Day”, which shocked global markets with its unexpectedly high rates (link). The US subsequently paused the implementation for 90 days and instead implemented a universal 10% baseline rate for most exporters, and set a new deadline of 1 Aug.
The latest adjusted tariff rates range from 10% to 41% (Syria) and target exports from 69 countries/regions, including Canada, India, Switzerland, and Brazil. Its close trade partner, Canada, was hit with 35% except for goods that are covered under the U.S.-Mexico-Canada free trade pact signed during Trump’s first term. Goods from Switzerland will be subjected 39% of duty, from 31% earlier. India said it will be negotiating with the US after being hit with a 25% tariff that could affect US$40 bn worth of its exports. In Southeast Asia, most economies, including Thailand and Malaysia, saw lower-than-expected rates of 19%. Singapore’s Ministry of Trade and Industry (MTI) on Fri (1 Aug) confirmed that the baseline 10% tariff will continue to apply (link).
Other than tariff rates on goods imports into the US, Trump also negotiated for investment commitments from the European Union (US$600 bn) and Japan (US$550 bn) into the US. No details have been released as to what qualifies as “investment” as well as the timeframe and enforcement mechanism for realizing these investments.
Suan Teck Kin
Head of Research
Follow Teck Kin on LinkedIn
