Singapore's small and medium enterprises (SMEs) are facing turbulent times as they grapple with the ripple effects of sweeping US tariffs imposed earlier this year. The sudden policy shift has forced local businesses to adopt defensive strategies, with many reconsidering their long-term growth plans.

"The current economic landscape is erratic, unpredictable and highly volatile," said Darren Goh, senior business development manager at Dynamic Optronics, a local optical products manufacturer. His company finds itself at a critical juncture - US sales account for 50-75% of its annual revenue.

The situation appears particularly dire for younger SMEs still working toward profitability. Dynamic Optronics reports being pressured by key customers to absorb half of the new tariff costs - an expense that would eat into approximately 1% of total revenue. For companies operating in the red, such concessions could prove devastating if extended across multiple clients.

Widespread Impact Across Industries

A recent flash poll by the Singapore Business Federation (SBF) paints a concerning picture: four out of five local businesses anticipate negative impacts from the tariffs. The survey gathered responses from 294 companies, over 80% being SMEs.

The findings reveal that 74% expect near-term revenue declines, with half anticipating rising operational costs. Alarmingly, nearly 40% of SME respondents forecast cost increases up to 25%. These pressures are forcing difficult decisions - while some plan price hikes (35%), others (18%) aim to maintain prices through supplier negotiations.

Strategic Shifts Emerge

Businesses are exploring various survival strategies:

• Market Diversification: Many are redirecting focus toward Southeast Asian and Middle Eastern markets
• Cost Absorption: Some like NinjaVan maintain pricing through existing international commercial terms
• Tactical Stocking: Companies like Theo10 Pharmaceuticals have prioritized securing key supplies preemptively

"We've stocked up on key ingredients from trusted partners," shared Theodore Khng, director at Theo10. "This approach secured better rates through volume discounts while we identified viable alternatives for less essential materials."

The Cash Flow Crunch

SBF's research highlights growing financial pressures:62%of businesses report increased working capital needs overthe coming year.SMEs disproportionately feelthis pinch,many resorting todelayed investments or dippingintocash reserves rather than takingon high-interest loans.

"Even though interest ratesare coming down,many SMEs remain reluctantto seek financing unless absolutely necessary," noted ASME president Ang Yuit.

Callsfor Government Support