Malaysia not considering retaliatory measures following US tariff hikes

Malaysia views the recent tariff hikes and reciprocal tariffs announced by the US as “serious” and is actively engaging with US authorities to seek solutions that will uphold the spirit of free and fair trade.

This follows US President Donald Trump’s announcement of sweeping new tariffs on goods entering the US. Southeast Asian nations facing higher reciprocal tariffs include Laos (49 per cent), Cambodia (49 per cent), Vietnam (46 per cent), Thailand (36 per cent), and Malaysia (24 per cent). The move could upend global trade.

Malaysia’s Investment, Trade and Industry Ministry (MITI), in a statement this morning, said that in upholding the spirit of free and fair trade, Malaysia is not considering retaliatory tariffs.

It added that the National Geoeconomic Command Centre (NGCC), recently approved by the Malaysian Cabinet, will evaluate the impact of the US announcement and consider a comprehensive, multipronged strategy to mitigate the effects of these tariffs on the country’s economy and industries.

“Malaysia will utilise the Trade and Investment Framework Agreement (TIFA) to seek reciprocal trade gains and pursue a Technology Safeguards Agreement with the US to facilitate high-tech cooperation in semiconductors, aerospace, and digital economy sectors,” the statement read.

According to the US Bureau of Economic Analysis, Malaysia ranks 15th on the US list with a trade surplus of US$24.8 billion in 2024.

“Despite the trade deficit in goods, the US enjoys a trade surplus in services with Malaysia, reflecting strong bilateral economic ties that support jobs and economic growth for both nations. It must be highlighted that the trade deficit with the US is also due to many US firms that have been operating in Malaysia for decades, on account of Malaysia’s well-established industrial ecosystem, especially in the electrical and electronics sector.”

“We acknowledge that President Trump’s tariff hike poses a significant challenge to global trade dynamics. While respecting such sovereign decisions, Malaysia strongly believes in constructive engagement for mutually beneficial economic relations.”

“To mitigate the tariff impact, Malaysia is expanding its export markets by prioritising high-growth regions and leveraging existing Free Trade Agreements (FTAs), including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP).

“Malaysia will also foster new partnerships within Asean and enhance its supply chain resilience by accelerating the implementation of key industrial policies like the New Industrial Master Plan 2030 (NIMP 2030) and the National Energy Transition Roadmap (NETR).”

It added that the Malaysian government is engaging with affected industries while exploring support programmes to help businesses adapt.

“MITI remains committed to open dialogue and collaboration to resolve trade disputes and promote mutual prosperity. Malaysia is facing this challenge from a position of strength and preparedness. The fundamentals of our economy remain robust.

“In the immediate future, while the external environment may be challenging, our diversified markets and products, along with strong demand for our produce, will provide some buffers. Furthermore, domestic demand, which is our main driver of growth, remains robust.

“MITI believes the Malaysian economy will continue to be resilient amidst these challenges,” it added.

According to Malaysia’s External Trade Statistics for January 2025, Malaysia’s top three trading partners were China (exports: RM13.3 billion, imports: RM9.4 billion), Singapore (exports: RM20.9 billion, imports: RM12.9 billion), and the United States (exports: RM17.3 billion, imports: RM11.2 billion).