KUALA LUMPUR: Malaysia remains in active negotiations with the United States to secure the lowest possible tariff by the Aug 1 deadline, says Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz.
Earlier this week, Bloomberg reported that Putrajaya is seeking to lower US tariffs to 20%.
However, Tengku Zafrul told the media yesterday that “20% is definitely not the target” and that “the direction is to get as low as possible”, bearing in mind also that 10% is the floor.
“We have seen that Japan’s tariffs are 15%. The updated news on the negotiations between the European Union (EU) and the United States may also see the EU with 15% tariffs. We have also seen tariffs for Indonesia at 19%, Vietnam at 20% and the Philippines at 19%.
“So we know roughly, if we give certain concessions, what kind of tariffs we would get. If we give certain concessions, we might get 20% or 19%. If we give all (the concessions), we may get 10% because there is a floor,” he told the media on the sidelines of the Asean Semiconductor Summit 2025.
Tengku Zafrul said he is “not confident” of securing a lower-than-20% tariff, stating “I do not decide the numbers.”
Further, he said that every country faces different challenges when it comes to what it can offer in the negotiations.
“We are not able to offer things that we do not have, or things we feel that may be judgmental to the Malaysian industry.
“However, I think we can get to a number which we feel is fair for both parties,” Tengku Zafrul said.
Earlier this month, Malaysian exports to the US were slapped with a 25% tariff that is set to take effect on Aug 1. In the meantime, the government is in active negotiations with the US to lower the tariff.
“We have meetings every day with the United States.
“However, we must bear in mind that we are not the only country negotiating with the United States. Many other countries are also in talks with the United States, so I do not think they can engage with all parties at the same time.
“However, what is important to us is that we are going to finalise it, to see how both leaders discuss and agree on the final tariff rate,” Tengku Zafrul said.
Currently, Tengku Zafrul said there were no discussions on the extension of the deadline.
Meanwhile, Maria Monica Wihardja, Visiting Fellow and Co-coordinator of the Media, Technology and Society Programme, ISEAS-Yusof Ishak Institute said it is “really difficult” for Asean countries to coordinate to respond to the US reciprocal tariffs, given as member countries “come from different starting points and have different stakes in their negotiations with the United States”.
“Right now, Vietnam has a 20% tariff rate, Indonesia is 19%, down from 32%. However, if you look at their stakes in terms of dealing with the US reciprocal tariffs, Vietnam’s export to gross domestic product is 86%, compared to Indonesia’s, which is below 25%.
“Indonesia’s trade balance with the United States is only 1% of their gross domestic product, while Vietnamese trade balance with the US is 20%.
“Hence, these countries have completely different stakes,” she said during the panel discussion titled, “Navigating Geopolitical Headwinds: Government Strategies to Strengthen Asean’s Semiconductor Supply Chain”.
From an economic perspective, Maria said the coordination among Asean countries would “obviously be quite tricky to implement”.
“Intra-Asean competition is perhaps what US President Donald Trump is looking for, in order to obtain bigger and more concessions from Asean countries,” she said.
Deputy International Trade and Industry Minister Liew Chin Tong said Asean’s strength lies in unity, underpinned by its strategic location, vibrant workforce, strong innovation and manufacturing capabilities, as well as a growing digital economy.
Liew noted that policy alignment, infrastructure readiness and cross-border collaboration is needed to realise this potential.
He noted that a stronger Asean cannot be only dependent on signing more trade deals among each other.
“We are going to improve on our current trade deals, but that is only part of the action. We have to come together and ask ourselves what we want to see in Asean in the next 20 years,” he said.
Liew noted that ultimately, countries need to be determined that they want to see Asean as a middle-class society.
“Think about this, why are we dealing with Trump in a bilateral fashion?
“It is very much because over the last 80 years, the Asean society grew rich by exporting to the United States.
“We are seeing the United States as the consumer of the last resort and in many instances, as the consumer of the first resort.
“This is not just restricted to Malaysia or Asean countries. Up until today, Japan, South Korea, China, Taiwan, they are all seeing the United States as the consumer of the first resort,” he said.
Liew added that the challenge now is in changing that and part of the effort is that Asean must not only exist as a production site.
“Asean countries need to be richer in order for the region to become a market.
“To do this, we need to rewire how we think about wages and how we think about each other,” he said.
