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 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 Limitations.”
He added that this so-called “reciprocal tariff” is separate from all sectoral tariffs and will likely be utilized even to items transhipped (i.e. moved from one ship to a different throughout transit) to evade the mentioned tariff. “There will likely be no tariff if Malaysia, or corporations inside your nation, resolve to construct or manufacture product inside america and, in reality, we’ll do all the pieces attainable to get approvals rapidly, professionally and routinely — in different phrases, in a matter of weeks,” he mentioned within the letter posted to Reality Social.
Trump added that the present “unsustainable” commerce deficit is “a serious 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 elevate the mentioned tariff by the identical quantity.
“If you happen to want to open your heretofore closed buying and selling markets to america, and remove your Tariff, and Non Tariff, Insurance policies and Commerce Limitations, we’ll, maybe, contemplate 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 nations in April, together with a further “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 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 presently doesn’t export vehicles to the US, it’s a international participant within the provide of automotive elements, significantly semiconductors. Fortunately, semiconductors are presently exempt from the tariff, mentioned Penang chief minister Chow Kon Yeow, whose state’s economic system is reliant on exports.
He added, nevertheless, that the broader implementation of the tariff “nonetheless poses an financial threat,” and that the variations in tariff charges throughout ASEAN may distort commerce dynamics and affect future funding choices throughout the area.
“Between January and Could 2025, Penang accounted for 55% of Malaysia’s whole 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 constantly 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 may very effectively result in inflation in Malaysia, which can drive up costs of products, together with vehicles.
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