The new US tariff policy is expected to have a significant impact on Malaysia’s economy, especially in the mid to long term, according to Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz. Speaking at a press conference, Tengku Zafrul explained that because Malaysia is one of the United States’ top trading partners in ASEAN and a major recipient of US-based investments, the country won’t be spared from the effects of the 24% tariff.
“These tariffs are broad and affect nearly every country that trades with the US, including Malaysia,” he said. “If countries begin retaliating, we could be looking at a serious global trade war.”
On a more optimistic note, Zafrul said Malaysia’s position could still offer some advantages. Since the 24% tariff is lower than what’s being imposed on other countries—such as Cambodia (49%), Laos (48%), and Vietnam (46%)—some Malaysian exports may become more appealing to global buyers.
“This makes us more attractive to US companies looking for suppliers of inputs or intermediate goods,” he said.
He also mentioned that products like palm oil could become more competitive compared to other vegetable oils, potentially leading to increased global demand for Malaysian exports. However, the minister cautioned that the overall impact is likely to be negative. Key export sectors may see a drop in demand and revenue, which could also affect employment.
“There are concerns that investments will slow down, and this could eventually reduce Malaysia’s GDP and weaken global economic growth,” he warned.
Another concern is the risk of "dumping," where countries with excess production might flood Malaysia’s market with cheaper goods, increasing competition for local producers. Certain industries, such as semiconductors, critical minerals, pharmaceuticals, and specific energy-related products, have been temporarily exempt from the new tariffs. Still, Zafrul warned these sectors may come under scrutiny in the future.
He pointed out that semiconductors are currently Malaysia’s top export to the US. Meanwhile, other industries like machinery, furniture, rubber, and plastics are expected to take a direct hit from the policy changes.
Feedback from investors has been mixed so far. Many are waiting to see the full impact once the tariffs officially kick in on April 9.
“Some foreign and local investors have started to pause expansion plans and are conserving cash,” said Zafrul. “They’re also looking to grow their businesses in markets like China, India, and other ASEAN countries instead.”
Despite the challenges ahead, Zafrul said the government is committed to protecting Malaysia’s economic interests and will continue working with industries and business groups to find the best way forward.
“MITI will do everything it can to support our businesses and workers,” he said. “Our priority is to protect the well-being of the people and the strength of our export sector.”
Source: New Straits Times