Tengku Zafrul concedes Malaysia hit with 19pc US tariffs after refusing to cross ‘red lines', but insists won't retaliate

Malay Mail

7 hours ago

KUALA LUMPUR, Aug 18 — Malaysia faces a 19 per cent tariffs from the United States since it refuses to cross the 'red lines' in its negotiations with Washington, Minister of Investment, Trade and Industry Datuk Seri Tengku Zafrul Abd Aziz has said.
Speaking in an interview with US-based CNBC's 'Squawk Box Asia', Tengku Zafrul said that Malaysia will however not retaliate since the US is too important as an investor and export destination for Malaysia and Asean.
'We've seen that there were some red lines that we discussed during our tariff negotiation, and they understood,' he said.
'And I mean, that's, I guess, one of the reasons why we got 19 per cent is because we don't meet up with all the requests. We didn't agree with all the requests.'
The transcript of the interview was made available to Malay Mail.
On August 1, the US announced it has imposed a reduced tariff of 19 per cent on Malaysian imports — revised from the initially scheduled 25 per cent.
Last month, Prime Minister Datuk Seri Anwar Ibrahim stressed that Malaysia will not bow to pressure that could undermine national policies, including negotiations with the US related to tariffs.
He said that although investment and trade with the US are significant, Malaysia has a 'red line' in negotiations — namely the Bumiputera policy — which must not be compromised, even if it is perceived as 'discriminatory' by external parties.
In addition, Tengku Zafrul also acknowledged market concern over possible sectoral tariffs, noting former US president Donald Trump has floated duties as high as 300 per cent on semiconductor products.
He said semiconductor tariffs remain at 0 per cent, but warned that sharp hikes would hit Malaysia and its regional peers.
'If you look at the supply chain of semiconductor, Malaysia, Singapore, Vietnam, I mean all the Asean countries are quite involved in that supply chain into the US, into China, into Europe. And this will have an impact to not just for Malaysia or for Asean, but globally as well,' he said.
On diversification, he said Malaysia is pressing ahead with multiple trade tracks to reduce over-reliance on not only US, but also China.
Tengku Zafrul also disclosed Malaysia has concluded a trade deal with South Korea that is slated to be signed at Asia-Pacific Economic Cooperation (Apec) or a leaders' summit.
Talks with the European Union have resumed after stalling in 2012, and engagement with the Gulf Cooperation Council has begun, he added.
He said Malaysia is also pushing to upgrade the Asean-India Trade in Goods Agreement and has concluded a third-version upgrade of the Asean-China Free Trade Agreement with green and digital chapters.
Tengku Zafrul added that with intra-Asean trade still below 25 per cent, an Asean Digital Economy Framework Agreement — set for discussion in Malaysia on the 28th — will be critical to pull more small and medium enterprises into regional trade.