The on-again, off-again Trump tariffs on foreign-made items at the moment are 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 stated the transfer is geared toward redressing a commerce deficit stemming from Malaysia’s “Tariff, and Non Tariff, Insurance policies and Commerce Limitations.”
He added that this so-called “reciprocal tariff” is separate from all sectoral tariffs and will probably be utilized even to items transhipped (i.e. moved from one ship to a different throughout transit) to evade the stated tariff. “There will probably be no tariff if Malaysia, or firms inside your nation, determine to construct or manufacture product inside the USA and, actually, we’ll do every thing doable to get approvals shortly, professionally and routinely — in different phrases, in a matter of weeks,” he stated within the letter posted to Reality Social.
Trump added that the present “unsustainable” commerce deficit is “a significant menace 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 increase the stated tariff by the identical quantity.
“In case you want to open your heretofore closed buying and selling markets to the USA, and eradicate your Tariff, and Non Tariff, Insurance policies and Commerce Limitations, we’ll, maybe, think about an adjustment to this letter,” Trump stated. “You’ll by no means be dissatisfied 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 choice only a week later, making use of the ten% charge the world over (aside from China, with which the US is nonetheless embroiled in a commerce struggle) for 90 days whereas negotiations happen. Evidently, these three months are up.
Whereas Malaysia at the moment doesn’t export automobiles to the US, it’s a international participant within the provide of automotive elements, significantly semiconductors. Fortunately, semiconductors are at the moment exempt from the tariff, stated Penang chief minister Chow Kon Yeow, whose 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 selections 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 stated. “Electrical equipment and tools constituted 77% of Penang’s exports to the US, with a big share pushed by the semiconductor trade.”
Chow stated the Malaysian authorities urgently must constantly interact with its US counterparts to barter for a decrease tariff charge, including that Penang “will proceed to work carefully with the federal authorities and trade gamers to safeguard the nation’s financial curiosity.”
It additionally goes with out saying that the tariff might very nicely result in inflation in Malaysia, which can drive up costs of products, together with automobiles.
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