KUALA LUMPUR: A national business group has called the decision by the United States to reduce tariffs on Malaysian imports from 25% to 19% a “modest but significant” one for local industry.
Federation of Malaysian Manufacturing (FMM) president Tan Sri Soh Thian Lai lauded the move as a timely and strategic one, particularly in the current global trade environment.
“Although the 6% point reduction may seem modest, it is significant for industry players, especially for sectors operating on thin margins or those competing in price-sensitive global supply chains.
“The reduction enhances the overall cost competitiveness of Malaysian-manufactured goods in the United States market and serves as an important signal of improved bilateral trade relations,” he said in a statement on Friday (Aug 1).
While some may argue that the impact on Malaysian exporters could be limited because United States’ importers bear the tariff cost, Soh believes that the burden of tariffs is often shared across the supply chain.
“Therefore, the tariff reduction benefits not only Malaysian exporters but also importers from the United States, as it improves the overall cost equation.
“It can also stimulate demand for Malaysian goods, especially in sectors where price plays a crucial role in purchasing decisions,” he said, adding that the revision is expected to support export growth, improve market access and further strengthen the longstanding economic ties between both countries.
He said FMM anticipates that several export-oriented industries, including electrical and electronics, machinery and equipment (M&E), rubber-based products and processed industrial goods, may benefit from improved competitiveness and increased demand.
"This move also comes at a critical juncture and FMM hopes it will pave the way for further easing of trade barriers and deeper collaboration under frameworks such as the Indo-Pacific Economic Framework," he said.
Malaysia will now face a 19% tariff on exports to the United States, reduced from the previous 25%, under an executive order signed by United States President Donald Trump.
The new tariff structure takes effect in seven days and applies to goods entering the US for consumption, with limited exceptions for shipments already in transit.
Signed on July 31, 2025, the order amends Executive Order 14257 and imposes revised ad valorem duties on multiple trading partners, including all major Asean nations.
Under the latest tariff list, Malaysia, Thailand, Indonesia, the Philippines, and Cambodia each face a 19% rate.
Vietnam faces a 20% tariff, while Brunei is listed at 25%. Laos and Myanmar are hit with the highest rate at 40%.
