Perplexing and warrants scrutiny: Malaysian lawmaker says US must justify new tariff rates

A Malaysian lawmaker has raised questions about the US administration’s justification for imposing a 24 per cent reciprocal tariff on goods imported from Malaysia.

Howard Lee, the Ipoh Timur MP and DAP’s political education director, said the US administration claimed Malaysia imposes a 47 per cent tariff on American goods, justifying the 24 per cent reciprocal tariff.

“This figure is perplexing and warrants scrutiny,” he said.

“Malaysia’s average applied tariff rate is considerably lower, and such a high percentage does not align with our nation’s trade policies or strategic positioning. How did the US arrive at this 47 per cent figure? Is this an overestimation, a miscalculation, or perhaps a conflation of various non-tariff measures?”

“The lack of transparency in this calculation raises concerns about the fairness and accuracy of the imposed tariffs.”

Lee also pointed out that Nobel laureate economist Paul Krugman had critiqued the methodology behind these tariffs, calling the calculations “completely crazy.”

“For instance, the European Union, which has an average tariff of just 3 per cent on US goods, is purportedly assigned a 20 per cent tariff under this new policy. This discrepancy underscores the arbitrary and potentially punitive nature of the tariffs.”

US President Donald Trump announced sweeping new tariffs early this morning (Malaysian time), targeting goods from several Southeast Asian nations. Countries 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. However, the ministry viewed the tariff hikes as “serious” and is actively engaging with US authorities to seek solutions.

“Let’s be honest: this isn’t really about fairness. It’s about power. And we must recognise it for what it is – a loud thump from a superpower trying to reclaim its dominance in a world that has moved on,” said Lee.

He added that the tariffs will hurt Malaysia.

“Malaysia is not just a trading nation; we are a manufacturing powerhouse, a middle-income country striving to climb the value chain. Over 40 per cent of our exports are electronics and electrical components – semiconductors, sensors, circuit boards – many of which are destined for the US.

“Yes, these exports are not yet part of this latest tariff regime, but that doesn’t mean they won’t be when another set of calculations – or miscalculations – reaches the Oval Office.

“When these and other products are taxed an extra 24 per cent, American buyers may look elsewhere. That means fewer orders, smaller contracts, and – most painfully – fewer jobs in Penang, Johor, Selangor, and even Perak.”

Lee noted that several multinational companies based in Ipoh, about 250km north of Kuala Lumpur, play a significant role in Malaysia’s local economy and the global supply chain.

“Notable examples include multinational corporations from the US, the UK, Switzerland, Japan, and Malaysia, spanning sectors such as semiconductors, industrial machinery, power transmission, specialty soldering materials, and rubber-based manufacturing.

“While some – like those in the semiconductor industry – are not yet directly affected by the tariffs, global supply chains are deeply interdependent. Even indirect disruptions could cascade through production schedules and employment levels in Ipoh.”

He added that companies producing industrial chains, latex gloves, and precision machinery would feel the impact immediately.

“With a sudden increase in costs for American buyers, competitiveness in the US market may plummet, leading to potential order cancellations, shrinking margins, and operational recalibration. These challenges could translate into economic strain for the local ecosystem, particularly for skilled labour and ancillary industries dependent on export-oriented manufacturers.

“When global demand drops, the first to suffer are factory workers, logistics drivers, and port labourers – not billionaires.”

Lee proposed several measures for Malaysia to mitigate the impact of these tariffs, including:

• Reigniting and escalating diplomatic engagements with the US. • Broadening Malaysia’s markets, particularly in the Middle East, India, Africa, and Southeast Asia. • Investing in skills and workforce upskilling. • Expanding Malaysia’s digital economy.

Former lawmaker Charles Santiago said the tariff hikes were part of a broader trend where “tariffs are no longer mere trade tools but geopolitical weapons.”

Santiago, co-chair of Asean Parliamentarians for Human Rights, said powerful economies like the US use tariffs to force trading partners into a defensive stance, compelling them to negotiate under terms that often extend beyond commerce.

“This strategy does not just recalibrate trade balances; it reshapes alliances, supply chains, and even domestic policies in weaker economies,” said Santiago, the former Klang MP.

“At its core, this approach exploits dependency. Countries like Malaysia, deeply integrated into US-led supply chains, face an impossible choice – either absorb punitive costs or submit to political and economic concessions in exchange for relief.”

“Semiconductor giants, medical suppliers, and agricultural exporters must now navigate a labyrinth of lobbying, diplomacy, and compliance – all while competing for the favour of Washington’s trade architects. This is simply narcissistic.”

He warned of long-term consequences.

“As more nations adopt retaliatory tariffs, global commerce fragments into blocs where access is contingent on political compliance rather than market efficiency. Supply chains, already strained by pandemic shocks and geopolitical tensions, grow more brittle.”

“This doesn’t just raise trade costs but risks exacerbating hidden human crises. As corporations scramble to bypass tariffs by relocating production or seeking cheaper labour, oversight mechanisms preventing exploitation begin to fray. When legal trade becomes more expensive and complex, illicit alternatives – including forced labour and trafficking – often fill the gaps.”

Santiago cautioned the US to reconsider its strategy, arguing that short-term gains could lead to long-term instability.

“While the US may secure short-term advantages, eroding trust in trade rules will ultimately destabilise the very system that enables its current dominance.”

“If Malaysia and similar economies fail to adapt, they risk becoming permanent subjects in an increasingly transactional and coercive global order. The weaponisation of tariffs is not just a trade policy but a reshaping of global economic sovereignty.”

“The question is no longer whether to engage with the US, but how to do so without surrendering strategic autonomy,” he added.