The on-again, off-again Trump tariffs on foreign-made items are actually again on once more, as US president Donald Trump will reinstate a 25% tariff on merchandise produced in Malaysia from August 1, Malay Mail has reported. In a letter despatched to Yang di-Pertuan Agong Sultan Ibrahim Iskandar – ostensibly billed as an invite to take part within the “primary market on the earth” – the commander in chief mentioned the transfer is geared toward redressing a commerce deficit stemming from Malaysia’s “Tariff, and Non Tariff, Insurance policies and Commerce Boundaries.”
He added that this so-called “reciprocal tariff” is separate from all sectoral tariffs and can be utilized even to items transhipped (i.e. moved from one ship to a different throughout transit) to evade the mentioned tariff. “There can be no tariff if Malaysia, or corporations inside your nation, resolve to construct or manufacture product inside america and, the truth is, we’ll do every thing doable to get approvals rapidly, professionally and routinely — in different phrases, in a matter of weeks,” he mentioned within the letter posted to Fact Social.
Trump added that the present “unsustainable” commerce deficit is “a serious risk to our economic system and, certainly, our nationwide safety!” He warned that if Malaysia reciprocates by imposing taxes on US-made items, the US will additional elevate the mentioned tariff by the identical quantity.
“In the event you want to open your heretofore closed buying and selling markets to america, and get rid of your Tariff, and Non Tariff, Insurance policies and Commerce Boundaries, we’ll, maybe, think about an adjustment to this letter,” Trump mentioned. “You’ll by no means be disillusioned with america of America.”
Trump beforehand introduced a base tariff of 10% on all international locations in April, together with an extra “reciprocal tariff” on nations with a perceived commerce deficit, together with a 24% tariff on Malaysia. He then walked again on his resolution only a week later, making use of the ten% fee internationally (aside from China, with which the US is nonetheless embroiled in a commerce battle) for 90 days whereas negotiations happen. Evidently, these three months are up.
Whereas Malaysia presently doesn’t export vehicles to the US, it’s a international participant within the provide of automotive parts, notably semiconductors. Fortunately, semiconductors are presently exempt from the tariff, mentioned Penang chief minister Chow Kon Yeowwhose state’s economic system is reliant on exports.
He added, nonetheless, that the broader implementation of the tariff “nonetheless poses an financial danger,” and that the variations in tariff charges throughout ASEAN might distort commerce dynamics and affect future funding choices throughout the area.
“Between January and Might 2025, Penang accounted for 55% of Malaysia’s complete exports to the US, valued at RM52 billion,” he mentioned. “Electrical equipment and gear constituted 77% of Penang’s exports to the US, with a big share pushed by the semiconductor business.”
Chow mentioned the Malaysian authorities urgently must repeatedly interact with its US counterparts to barter for a decrease tariff fee, including that Penang “will proceed to work intently with the federal authorities and business gamers to safeguard the nation’s financial curiosity.”
It additionally goes with out saying that the tariff might very effectively result in inflation in Malaysia, which is able to drive up costs of products, together with vehicles.
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