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 this planet” – 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 might be utilized even to items transhipped (i.e. moved from one ship to a different throughout transit) to evade the mentioned tariff. “There might be no tariff if Malaysia, or firms inside your nation, resolve to construct or manufacture product inside the USA and, the truth is, we are going to do every little thing potential 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 significant menace to our financial 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.
“Should you want to open your heretofore closed buying and selling markets to the USA, and remove your Tariff, and Non Tariff, Insurance policies and Commerce Boundaries, we are going to, maybe, take into account an adjustment to this letter,” Trump mentioned. “You’ll by no means be upset with the USA 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 determination only a week later, making use of the ten% fee the world over (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 at the moment doesn’t export vehicles to the US, it’s a world participant within the provide of automotive elements, notably semiconductors. Fortunately, semiconductors are at the moment exempt from the tariff, mentioned Penang chief minister Chow Kon Yeow, whose state’s financial 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 may 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 tools 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 carefully with the federal authorities and business gamers to safeguard the nation’s financial curiosity.”
It additionally goes with out saying that the tariff may very effectively result in inflation in Malaysia, which can drive up costs of products, together with vehicles.
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