JOHOR BARU: The economic impact from new US tariffs will likely have a minimal effect on businesses in Johor despite the fact that the duties could raise inflation.
Trade associations say that while some Malaysians might cut back on spending due to economic uncertainty, the gap is likely to be filled by Singaporean consumers.
Johor Baru Small Businesses Association chairman Tey Tian Hwang said the tariffs, which has been paused for 90 days, will likely not affect consumers from Singapore as the exchange rates still favour the Singaporean dollar.
The Singapore dollar stood at RM3.35 as of press time.
“There is still a chance that we will see more changes in the weeks to come, but either way, I do not think that it will affect the way Singaporeans spend their money here,” said Tey.
“They enjoy coming here because things are cheaper due to their stronger currency against our ringgit, and I do not see how that may change anytime soon.”
On the flip side, locals are likely to spend less as people try to reduce their expenses due to the unpredictable global economic climate, Tey said.
“The tariff may contribute to inflation, which would drive people to reduce their spending, especially on non-essential items and services,” he said.
Johor-based hotelier Ivan Teo echoed this view, saying that the state will likely see a drop in visitors from other countries.
“I believe Singaporeans will still come here because of their stronger currency,” said Teo, who heads the Johor chapter of the Malaysian Association of Hotels (MAH).
“However, hoteliers may see a dip in occupancy from locals and visitors who want to reduce their spending.”
Johor Tourist Guides Association chairman Jimmy Leong said the tariffs may discourage the public, including Singaporeans, from spending on US-made products.
“The only foreseeable impact on Singaporeans’ buying less US-made products from us is that it could also encourage them to look for more local products.”
About a week after he announced sweeping tariffs on almost all countries that trade with the US, President Donald Trump announced a pause on the decision on April 9.
However, he intensified tariffs on China.
In Trump’s original decision, Malaysian exports to the US would be hit by 24% tariffs.
Other Asean countries that were hit by tariffs include Cambodia (49%), Laos (48%), Vietnam (46%), Myanmar (44%), Thailand (36%), Indonesia (32%), Brunei (24%), the Philippines (17%) and Singapore (10%).
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