Malaysia faces 24 pct reciprocal tariff imposed by the US

by DayakDaily Team

KUCHING, April 3: US President Donald Trump has announced sweeping new import tariffs on US’ trading partners, a move expected to have a significant impact on global trade.

Dubbed the ‘Liberation Day’ tariffs, the new duties take effect on April 9, imposing a minimum 10 per cent baseline tariff on all imports to the US. Malaysia faces a higher 24 per cent reciprocal tariff.

Malaysia is not the only country in the Asean region to be hit by similar rates. US has also imposed retaliatory tariffs on Cambodia (49 per cent), Laos (48 per cent), Vietnam (46 per cent), Myanmar (45 per cent), Thailand (37 per cent), Indonesia (32 per cent), Brunei (24 per cent), the Philippines (18 per cent), and Singapore (10 per cent).

According to the Ministry of Investment, Trade, and Industry, US is Malaysia’s third largest trading partner since year 2015, with its trade the country making up 11.3 per cent of Malaysia’s total trade.

In 2024, trade between Malaysia and the US reached RM324.91 billion. Exports to the US totalled RM198.65 billion, primarily driven by electrical and electronics (E&E) products, machinery, equipment, and rubber goods. Imports from the US amounted to RM126.26 billion, with main imports including E&E products, machinery, and chemicals.

Analysts at the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) paint a gloomier view on the trade outlook following the announcement of the tariff hikes.

“If we assume the tariff hikes also cause demand from regional countries to weaken, additional 10 per cent declines in exports to regional countries (such as Singapore, Taiwan, South Korea, Vietnam, Japan and even China) could cause the overall exports to experience a larger decline of around 5.8 percentage points,” it said in a report.

It also expected that the weaker production could result in reduced imports of intermediate goods such as among others E&E products; machinery, equipment & parts; and manufactures of metal.

“Taking into account the reduced imports, we estimate the net impact of external trade slowdown on Malaysia’s GDP growth could be up to 1.5 percentage points.

“In other words, Malaysia can still maintain growth of around 3.0 per cent (given our existing baseline forecast at 4.6 per cent) this year, supported by the sustained growth in domestic economic activities,” it added.

At this point, while MIDF Research believed that the tariffs are unlikely to cause a sharp global economic contraction, it cautioned that this “trade war 2.0” extends beyond the previous US-China dispute, affecting a wider range of countries.

“On the other hand, efforts to promote greater trade with other regions such as BRICS and Asean will partly mitigate the slower demand from the US,” it said. – DayakDaily

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