Malaysia is bracing for the possibility that US President Donald Trump’s tariffs will leave a lasting impact on its economy for years to come, given that nearly all of its trading and investment partners will be affected by the new regime.
The government is taking measures to address the tariffs’ impact, said Minister of Investment, Trade and Industry Tengku Datuk Seri Zafrul Abdul Aziz. These include setting up a task force to gather feedback from stakeholders, assessing the impact on industries and continuing its engagement with Washington, he said. Zafrul is seeking meetings with US officials by month-end.
"We are one of the US’s largest trading partners in Asean, and also one of the major recipients of US-based foreign investment,” the minister said at a briefing Monday in Kuala Lumpur. "We must therefore acknowledge that there will be mid-to-long-term impact.”
The direct hit will include reduced demand and revenue, as well as conservative investment spending, Zafrul said. "In the long run, it may lead to decrease in Malaysia’s GDP and slowdown in global growth,” he added. The government is also vigilant of potential dumping of imported goods, he said.
Still, Malaysia’s "moderate” tariff rate could see some of its exports becoming more competitive in the global market, Zafrul said. The nation will also see some gains over palm oil exports as consumers opt for cheaper substitutes, he added.
After starting off the year on an optimistic note, Malaysia is now reviewing its gross domestic product growth target for 2025 should the tariffs come into effect on April 9. The Malaysian ringgit was one of the biggest losers in Asia on Monday, weakening 0.6% against the US dollar. The Kuala Lumpur benchmark stock index slumped as much as 5.7%, its biggest intraday drop since the start of the Covid pandemic.
The nation is also seeking to lead efforts to coordinate a regional response to the tariffs. Countries in the Association of Southeast Asian Nations are among those hardest hit: Vietnam and Cambodia were slapped with rates of 46% and 49%, respectively, by the Trump administration, while Malaysia is subject to a 24% levy.
Like its regional peers, Malaysia has opted not to retaliate against the punishing trade overhaul and is seeking engagement, though it’s refuted the Trump administration’s claim that it imposes a 47% levy on US goods. - Bloomberg
