Malaysia bracing for possible US tariffs on semiconductors
KUALA LUMPUR : Malaysia needs to remain prepared for the possibility of the US imposing tariffs on the semiconductor industry amid a review by Washington, says investment, trade and industry minister Tengku Zafrul Aziz.
Tengku Zafrul told the Dewan Rakyat that 100,000 workers, especially in Penang and Kedah, may be at risk of losing their jobs if high tariffs reduce the demand for electrical and electronic goods in the US.
Although semiconductor products are currently exempted from the 19% tariff imposed on goods from Malaysia, he said, the US government is investigating whether extensive reliance on foreign imports of pharmaceuticals and semiconductors poses a national security threat.
'The US could impose additional tariffs on grounds of national security,' he said in a ministerial statement on the tariffs.
'We cannot take any changes in US trade policies lightly as they will negatively impact Malaysia,' he said, stressing that the US was Malaysia's largest export destination and one of the nation's main sources of foreign investment last year.
On Aug 1, the US announced a 19% tariff on Malaysian exports effective Aug 8, a reduction from the 25% tariff previously imposed. Thailand, Indonesia and the Philippines were also hit with a 19% tariff rate, while Vietnam faces a slightly higher rate of 20%.
Tengku Zafrul said although his ministry had hoped for a lower rate, he believed that negotiators managed to achieve a 'reasonable outcome' without compromising the country's key policies and sovereignty.
He said Malaysia and the US were still in the process of reaching an agreement on a joint statement that includes the mutually agreed upon commitments.
He also said Malaysia and the US are working towards a reciprocal trade agreement to safeguard long-term cooperation and minimise the risk of punitive measures.
Malaysia is the world's sixth-largest semiconductor exporter, with E&E exports surpassing RM600 billion last year.
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