24 per cent tariff: Malaysia's exports under pressure from US trade move

SHAH ALAM – Malaysia’s export industry is facing a significant blow after the United States (US) imposed a 24 per cent tariff on Malaysian goods—a move expected to disrupt key sectors including electronics, textiles and rubber-based products.

The decision was part of US President Donald Trump’s newly announced reciprocal tariff policy, placing Malaysia among the hardest-hit countries after Vietnam (28 per cent) and Indonesia (26 per cent) and raising serious concerns over trade competitiveness and economic stability.

Speaking to Sinar Daily, O2 Research Head Anis Anwar said the tariff hike reflects a shift in the US-Malaysia trade relationship and places Malaysia in a more challenging position compared to its regional peers.

“This measure marks a new phase in bilateral relations, putting Malaysia in a tougher trading environment,” he said.

While neighbouring countries such as Singapore, the Philippines and Thailand face lower tariffs between 8 and 15 per cent, Malaysia’s position as the third-most affected highlights the economic risks ahead.

Anis said the new tariff rates are likely to put pressure on export-reliant sectors, especially manufacturing, which depends heavily on access to the US market.

“Industries like electrical goods, electronics, textiles and rubber-based products could see reduced export volumes and revenue declines,” he warned.

However, he pointed out that certain exemptions under the new tariff structure may soften the impact.

“Semiconductors, pharmaceuticals, copper, gold and timber have been excluded from the tariff hike.

"Since semiconductors account for nearly 60 per cent of Malaysia’s exports to the US, this exemption plays a critical role in cushioning the blow,” Anis said.

Beyond economics, he stated that the move carries geopolitical weight, potentially signalling US dissatisfaction with Malaysia’s trade and foreign policy stance.

“This decision isn’t just about trade—it reflects changing geopolitical dynamics. While some exemptions help, the broader message is clear: Malaysia may need to reassess its trade relationships,” he said.

US Targeting Trade Surpluses

Universiti Malaya Business and Economics Faculty deputy dean and researcher, Datin Associate Professor Dr Izlin Ismail said Malaysia’s trade surplus with the US likely made it a target for the higher tariff rate.

“The base tariff for all countries started at 10 per cent. Under this reciprocal system, our exports now face a 24 per cent rate—far steeper than many regional neighbours,” she said.

Izlin also observed that the Malaysian ringgit began to depreciate soon after the announcement, even before trade volumes were affected.

“A weaker ringgit will make imports more expensive and could drive inflation higher. This adds another layer of economic pressure beyond the export sector,” she said.

What Are Reciprocal Tariffs?

Unlike traditional tariffs aimed at protecting local industries, reciprocal tariffs are designed to match the trade policies of partner nations.

“When the US imposes a reciprocal tariff, it’s essentially mirroring the duties that countries like Malaysia place on American goods.

"This isn’t just economic—it’s political, and it’s meant to push countries into renegotiating trade terms,” Anis said.

The Trump administration has long been critical of what it sees as global trade imbalances.

The higher tariffs on Malaysia and others reflect a tougher US stance, leveraging its market power to demand fairer access.

Despite the immediate economic impact, analysts say the development also serves as a wake-up call for Malaysia to diversify its export markets and reduce over-reliance on the US.