ST Explains: What does Trump’s new tariff on ‘forced labour’ mean for Singapore trade?

Trump's proposed forced-labour tariff drew immediate criticism from major economies such as the EU and China, and experts expect lawsuits once it takes effect.

SINGAPORE – Four months after losing his sweeping reciprocal tariffs to a court decision, US President Donald Trump has made his first move to replace them with trade levies he believes are less vulnerable to legal challenges.

On June 2, Trump’s trade office in Washington issued a comprehensive 98-page report proposing double-digit tariffs on 60 countries – which represent about 99 per cent of all US imports – after an investigation initiated on March 12 showed they were not doing enough to restrict trade in goods produced by “forced labour”.

The Office of the US Trade Representative (USTR) placed trading partners into two groups, depending on what it considered varying degrees of ineffective enforcement of rules on trade in “forced-labour goods” and whether they had already struck a trade deal with the Trump administration.

The USTR said it would impose tariffs at the rate of 10 per cent on imports from Canada, the European Union, the UK, Indonesia, Mexico, Pakistan, Argentina, Bangladesh, Cambodia, El Salvador, Guatemala, Malaysia and Taiwan.

The remaining 45 countries, which include Singapore, China and India, would face higher duties of 12.5 per cent.

But nothing is settled yet. The tariff rates may change for some countries, including Singapore, as the proposed measure is subject to public comments and hearings before a USTR trade panel. This will start in July and may take weeks, if not months.

There is also at least one more USTR investigation that could lead to another tariff measure – pertaining to excess manufacturing capacity – that remains pending.

Despite the tariff tumult since 2025, Singapore has continued to clock strong growth in exports, thanks to the AI boom and increased trade with partners across Asia.

For now, little would change for companies that count the US as an export market if and when the new tax relating to forced labour applies.

The new measure will replace the 10 per cent global tariff – set to expire in late July – imposed soon after the Feb 20 Supreme Court ruling. That would raise the US effective tariff rate by just 0.5 per cent, according to experts.

The effective tariff rate reflects the average tariff paid across all imported goods into a country.