US tariffs expected to hit nation’s GDP

Malaysia is seeking clarification from the United States over the 24% retaliatory tariff announced by Presi­dent Donald Trump, says Tengku Datuk Seri Zafrul Tengku Abdul Aziz.

The Investment, Trade and Indus­try Minister said the govern­ment denies claims that Malaysia has imposed a 47% tariff on US imports, clarifying that the actual average tariff stands at about 5.6%, based on the simple ave­rage most favoured nation (MFN) applied rate.

“We totally disagree with the basis for calculating this tariff and have sought clarification on it from the US ambassador and his team this morning.

“This inaccurate basis for calculation has resulted in Malaysia being subjected to a retaliatory tariff of 24%,” he told a press conference yesterday.

Tengku Zafrul said the government was committed to securing a fair resolution that preserves market access, attracts foreign investment and supports the well- being of Malaysian businesses and workers.

“Malaysia aims to continue being a reliable trading partner, open to trade and investment while valuing all economic partnerships, including our ties with traditional partners like the Uni­ted States and China.

“We are an open, trading economy,” he said, Bernama reported.

He said the US’ latest tariff policy is expected to have a direct impact on Malaysia’s gross domestic product (GDP), presen­ting challenges to the country’s economic growth for this year and possibly for the years to come.

As one of the largest trading partners of the US in Asean, as well as a major destination for foreign investments from the US, Malaysia is likely to feel the impact of these tariffs in the medium to long term, he added.

“This impact is expected to be widespread because tariffs are also being imposed on nearly every trade partner and source of investment for Malaysia.

“If more countries impose reta­liatory tariffs, a global-scale trade war could break out, which would undermine global economic growth,” he explained.

The minister said the GDP growth forecast for 2025 at 4.5% to 5.5% will be reviewed based on a more comprehensive assessment report on the impact of the US tariffs.

“For now, the government expects economic growth to continue. Our household spending remains resilient, domestic invest­ments are strong, tourism revenues are solid, and national master plans are being implemented,” he said.

Tengku Zafrul pointed out that despite the negative impact, there are some positive direct and indirect effects.

“Among them, several Malay­sian exports are expected to become more competitive in the global market compared to other countries subjected to higher US tariffs.

“The tariff rate on Malaysia at 24% is considered more moderate compared to Cambodia (49%), Indonesia (32%), Laos (48%), Myanmar (45%), Thailand (37%), Vietnam (46%), and China (34%),” he added.

Tengku Zafrul said analysts believe this makes Malaysia more attractive to importers and US companies seeking inputs or intermediate goods.

He did not dismiss the possibility that negative direct impacts await, particularly in terms of reduced demand.

“When this happens, revenues will decrease and employment in the export sector will be affected.

“When demand decreases, invest­ments and expenditures will also drop.

“All of these factors will result in a decline in Malaysia’s GDP.

“If many countries face the same situation, global growth will slow down,” he said.

On investors’ reactions to this development, Tengku Zafrul said most domestic and foreign investors believe it is still too early to assess the impact on their operations until the tariffs are implemented on April 9.

“Some investors expect supply chain disruptions, especially those involving manufacturing contracts. There are also Malay­sian investors slowing down their business expansion plans and starting to adopt thrifty measures while focusing on market expansion in China, India, and Asean,” he said.

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