Malaysia could secure better US tariff terms before Aug 1, say economists

New Straits Times

13 hours ago

KUALA LUMPUR: Malaysia could still secure better tariff terms with the United States before the August 1 deadline, as US officials signal openness to negotiations despite ongoing concerns over trade imbalances, economists said.
This follows comments by US Secretary of State Marco Rubio, who during his visit to the 58th Asean Foreign Ministers' Meeting (AMM) here made clear Washington's willingness to continue talks with Asean members including Malaysia to reach mutually beneficial trade deals.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said Rubio appears to be trying to ease concerns about the US administration's tariff policies.
From the US standpoint, he said, trade imbalances have taken a serious toll on their economy, which is why tariffs are the policy instrument they use to address these issues.
"While tariffs remain the US government's tool of choice, Washington is open to discussions and negotiations. I suppose there is hope that a win-win solution can be achieved," he told Business Times.
Nevertheless, he said Malaysia needs to address the specific concerns raised by the US.
According to Afzanizam, the underlying objective behind the tariff push is likely aimed at gaining greater market access to Malaysia's economy.
He noted that the US had flagged several non-tariff barriers in its US Trade Representative Report on Foreign Trade Practices released in March this year.
Among the issues highlighted were Malaysia's halal certification processes, approved permits in the automotive sector and regulations governing foreign bank branches.
"Perhaps by addressing these issues, Malaysia could secure some form of concession in the form of lower tariffs. So, something needs to go in order to gain something," he said.
On the possible appearance of US President Donald Trump at the Asean Summit in October, Afzanizam said Malaysia and other Asean countries should be prepared for all eventualities, as Trump has a habit of making surprise announcements.
Echoing the views, economist Dr Geoffrey Williams said Rubio has been very open and friendly during his visit to the AMM.
He noted that Rubio made it clear the US is open to continuing negotiations with all Asean members to secure win-win trade deals.
Williams added that Rubio also emphasised Asean's importance to the US not just in trade, but also strategically and in terms of long-term security cooperation.
"This shows that the US is committed for the long run," he said.
According to Williams, it is possible for Malaysia to secure better tariff terms before August 1, but that would require a change in approach.
He believes Malaysia's current position - as stated by Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz - appears "very stubborn" and may make reaching a deal by August 1 more difficult.
Williams also said a presidential appearance would help cement relations between the US and Asean while also serving as a highlight of Malaysia's Asean chairmanship this year.
However, he noted that tariff issues could overshadow the summit unless a solid deal is reached beforehand.
During the AMM this week, Rubio said the tariffs imposed by the US are part of a broader push to rebalance its economy globally.
He explained that the move aligns with Trump's long-held view that global trade rules have put American workers and industries at a disadvantage.
Rubio added that Southeast Asian countries would receive official letters regarding the tariffs "at some point," but noted that discussions could lead to "better" tariff rates.
He stressed that the door for negotiations remains open, though markets require clarity, making it necessary to set a clear baseline starting August 1.
Earlier this week, Trump announced that a 25 per cent import duty on Malaysian goods would take effect from August 1, citing the need to "protect domestic industries" from what he described as unfair trade practices.
On April 2, Trump announced the retaliatory tariffs, where Malaysia was among the affected countries hit with 24 per cent, although enforcement was deferred by 90 days to allow time for negotiations.