‘US tariff cut relief to Malaysia not without trade-offs’
Economists urge government to strengthen structural competitiveness, make business easier
KUALA LUMPUR, Malaysia (MNTV) – Malaysia’s successful push to reduce punitive United States (US) tariffs from 25 to 19% offers partial relief to exporters and calms fears of a steeper economic fallout, reports Business Times.
But the reprieve, economists say, is no cause for celebration, as it is “modest at best”, and likely came in exchange for Malaysia holding the line on sensitive domestic policies.
Economist Dr Geoffrey Williams said the revised tariff, although pitched as a win, continues to impose a heavy cost. “It just puts Malaysia in line with Indonesia and the Philippines and only marginally below Vietnam. Singapore has no reciprocal tariffs, so is way ahead of other Asean countries,” he told Business Times.
Williams estimated that a 10% reduction in Malaysian exports to the US, the world’s largest consumer market, could cost the economy 20 billion Malaysian ringgit or $4.6 billion.
Investment, Trade and Industry Minister Zafrul Abdul Aziz said Malaysia stood firm during negotiations by drawing a “red line” on domestic economic policies.
He said the 19% tariff rate was achieved without compromising the nation’s sovereign right to implement key policies to support socio-economic stability and growth.
Williams described these trade-offs as “a huge cost” to maintaining what he called Malaysia’s protectionist policies. “If the 19% tariff is due to refusal to remove barriers, cut Bumiputera preferences and improve trade access, then there is a huge cost to maintaining these Malaysian protectionist policies.”
Center for Market Education chief executive Dr Carmelo Ferlito said the US tariff regime should be seen as part of a broader geopolitical recalibration. He said it had become clear early on that US President Donald Trump was not aiming for high tariffs per se, but rather to compel various players to come to the negotiating table and secure broader advantages for the US.”
While short-term impacts may take time to materialise, Ferlito pointed to deeper structural consequences. Tariffs do not directly translate into higher prices. But the medium-run outcome will be fewer opportunities for trade, fewer products in the market and potentially job losses, he added.
He urged Malaysia to strengthen its structural competitiveness instead of relying on reactive government support. The only useful government support comes from regulation that makes business easier, and slashing anything that hinders competitiveness, he said.
Have Your Say!
Have you been affected by the issues raised in this story? Please share your experiences by emailing haveyoursay@soundvision.com.
Please include a contact number if you are willing to speak to a Muslim Network TV’s representative. You can also get in touch in the following ways:
Tweet: @MuslimNetworkTV
We must take charge of our narrative. Research indicates that 92% of their Muslim coverage is negative. Help us change that.
