[UPDATED] Malaysia seeks answers from US over plan for 100 pct chip tariff

New Straits Times

4 days ago

KUALA LUMPUR: Malaysia has sought clarification from the United States over a proposed 100 per cent tariff on imported semiconductor chips, warning that such a move could adversely affect one of the country's most critical export sectors.
Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz said the government had contacted both the US Trade Representative and the Department of Commerce this morning to obtain an official statement on the matter.
He said that for now, Malaysia's semiconductor exports to the US remain exempt from retaliatory tariffs. However, if such measures are implemented, Malaysia risks losing a key market as its products may become less competitive.
"To ensure policy clarity and stability, and to safeguard the interests of our industry players, MITI (the Investment, Trade and Industry Ministry) maintains close communication with the US Trade Representative and Department of Commerce.
"We have taken the initiative to seek an official explanation to defend the interests of Malaysian exporters. This morning, we reached out to the US authorities, although there is a time difference.
"We will continue to fight for our exporters to ensure that any policy changes or exemption criteria are communicated and negotiated in advance, and that Malaysia's position as a strategic partner is preserved," he told Dewan Rakyat today.
He was responding to a supplementary question from Lim Guan Eng (PH-Bagan) regarding US President Donald Trump's announcement yesterday that the country would impose tariffs of up to 100 per cent on semiconductor chips imported from nations that do not produce such products in the US or have no plans to do so.
Tengku Zafrul said the matter would also depend on the outcome of an ongoing investigation under Section 232 of the US Trade Expansion Act 1962, under which the Trump administration is currently reviewing imports of pharmaceuticals and semiconductors.
"The investigation was initially expected to be completed by the end of December, but it now appears to be moving faster. The findings will be used to determine the next course of action, which could include higher tariffs.
"This morning, we were debriefed, and while it's officially stated that 100 per cent of the products concerned are imported from all countries, exceptions may be made for companies that invest and build factories in the US."
Tengku Zafrul said the government had already taken several mitigation measures in anticipation of such developments, including intensified engagement with key exporters and stakeholders along the semiconductor supply chain.
"At the same time, we are encouraging local companies to diversify and explore alternative export markets through chambers of commerce," he said.
"The government remains committed to closely monitoring the situation and pursuing proactive negotiations with our US counterparts."
He said clarification from Washington was also necessary to determine precisely what is meant by "semiconductors" in this context, as the term encompasses a wide range of products.
Citing 2024 data, Tengku Zafrul said Malaysia's electrical and electronic (E&E) exports to the US had reached RM119 billion, accounting for about 20 per cent of the country's total E&E exports.
Semiconductor exports alone were valued at RM60.6 billion, also making up about 20 per cent of the country's overall semiconductor exports.
"This industry employs 72,000 skilled workers and involves some 7,200 local suppliers, mostly small and medium enterprises (SMEs).
"If these products are subjected to tariffs under Section 232, the policy shift could have a significant impact on Malaysia.