Tengku Zafrul: Tariff deal shows Malaysia is a "reliable trade and investment partner"
"This decision by the US reflects the strong and enduring economic ties between our two nations," he said in a statement today. "It is also a testament to Malaysia's credibility as a reliable trade and investment partner."
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New Straits Times
15 minutes ago
- New Straits Times
Reduced 19pc US tariff fuels hope
KUALA LUMPUR: The United States has lowered its tariffs on imports from Malaysia to 19 per cent, bringing a wave of relief to the country's export-heavy industries and the local stock market. The new rate — a reduction from the original 25 per cent — is on a par with regional neighbours such as Indonesia, the Philippines, Thailand and Cambodia. The White House issued a presidential order dated July 31, outlining broader changes to the US Reciprocal Tariff framework under Executive Order 14257. It saw sweeping revision to the "liberation day" tariffs announced by President Donald Trump in April, reducing or slightly increasing rates on US trading partners. The April announcement saw Malaysia facing a 24 per cent tariff, adjusted to 25 per cent in July, before being reduced to 19 per cent effective Aug 8. This sits above the global baseline of 10 per cent. Industry players welcomed the lower rate, saying it reflects the result of constructive dialogue and engagement between the Malaysian and US governments. The cut may seem modest but it marks a significant boost for Malaysian exporters navigating increasingly competitive and cost-sensitive global supply chains, they added. At Bursa Malaysia, the news prompted a positive market reaction. The stock exchange's benchmark index FTSE Bursa Malaysia KLCI (FBM KLCI) saw an immediate rise as investors quickly priced in the positive impact on Malaysian exporters, particularly in sectors such as semiconductor, palm oil and rubber products. The key index rose 1.33 per cent, gaining 20.10 points to close at 1,533.35, up from Thursday's close of 1,513.25. Following the tariff clarity, the FBM KLCI is expected to trade higher next week, driven by clearer investor outlook. Enhancing Competitiveness While it is still too early to assess the full extent of the impact, several export-oriented industries may benefit from improved competitiveness and increased demand. Federation of Malaysian Manufacturers (FMM) president Tan Sri Soh Thian Lai said the tariff cut enhances the cost competitiveness of Malaysian-manufactured goods in the US market and reflects improved bilateral trade relations. He commended Prime Minister Datuk Seri Anwar Ibrahim's direct engagement with US President Donald Trump as well as the Investment, Trade and Industry Ministry and other relevant agencies for their continued efforts in advocating for the interests of Malaysian industry on the international stage. Malaysian Furniture Council president Desmond Tan said the tariff reduction brings Malaysia's treatment more in line with that of neighbouring Asean nations, helping to preserve its relevance within the regional supply chain. "Hopefully these latest tariffs can reduce uncertainty. However, exporters will still need to adapt to a higher-cost trade environment and continued support from the government remains valuable," Tan told the New Straits Times. Trade talks between the Malaysian and US governments began on May 6 and concluded on July 31, involving multiple platforms of engagement, according to the Investment, Trade and Industry Ministry. The US is Malaysia's largest export market, with trade valued at RM198.65 billion and its largest source of foreign direct investment, with RM32.82 billion in approved investments recorded in 2024. Underlying Risks While the 19 per cent tariff is "less damaging" than the initially proposed 25 per cent, some industry specialists said it still represents a hurdle that will weigh on Malaysia's exports in the global market. Moomoo Malaysia head of dealing Ken Low said the tariff easing is a short-term relief as there remains underlying risks that investors and exporters must navigate in the coming months. "While the tariff reduction is a positive development for Malay-sia's export sectors, it is far from a comprehensive solution," he said. For exporters, particularly in industries like semiconductor, palm oil and medical devices, the 19 per cent tariff could still pressure margins and profitability, Low said. Companies will likely face higher costs for their goods entering the US market, with potential price hikes or margin erosion. Additionally, supply chain disruptions caused by tariffs could delay shipments and reduce overall demand. In the glove sector, Malaysia — which is a major glove producer and exporter — no longer holds a rate advantage over Thailand, Indonesia or Cambodia. But the country's 19 per cent tariff is still lower than Vietnam's 20 per cent and China's 30 per cent, offering marginal competitiveness in the US market, according to CIMB Securities. In 2024, Malaysia held the largest share (about 45 per cent) of the global rubber glove market, followed by China (28 per cent) and Vietnam (10 per cent). CIMB Securities expects some incremental shift in the US glove orders to Malaysia, but higher tariffs will still increase US buyers' cost base, which may limit restocking or lead to leaner inventories.
The Sun
an hour ago
- The Sun
Reduced levy to take effect on Aug 8: Minister
PETALING JAYA: The reduced tariffs on Malaysian exports will take effect on Aug 8 following the conclusion of negotiations between both countries, said International Trade and Industry Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz. He said both governments are expected to issue a joint statement this weekend to formalise the agreement, which he described as a significant breakthrough in bilateral trade relations. 'In the tariff negotiations, we adopted a comprehensive and systematic approach in finalising Malaysia's offer to the US. 'The ministry's negotiation team worked closely with various government agencies to coordinate efforts. We also obtained Cabinet approval to present an offer to the US that we believe is fair for Malaysia.' He said the outcome reflects the strength of Malaysia-US economic ties with the US remaining Malaysia's largest export market valued at RM198.65 billion in 2024, and affirms Malaysia's credibility as a reliable trade and investment partner. Tengku Zafrul said the revised 19% tariff aligns Malaysia with regional competitors, helping safeguard national interests while maintaining export competitiveness. He also directly addressed public concerns that Malaysia may have compromised its halal standards to meet US demands, dismissing such claims as false. 'What was agreed upon was to facilitate the import process of US halal meat into Malaysia, which will be carried out by US halal certification bodies recognised by the Islamic Development Department. 'Compliance with syariah requirements remains a prerequisite for all halal meat imports, including those from the US. Any meat that does not meet the department's standards cannot be brought into Malaysia.' Tengku Zafrul thanked the US Trade Representative's Office and the US Commerce Department for their constructive cooperation. He said the ministry has been working with Bank Negara Malaysia to assess the economic implications of various tariff levels and would coordinate with other ministries to support local exporters, especially SMEs. The ministry will also promote the use of Malaysia's 18 free trade agreements to diversify export markets and align efforts with long-term national strategies, including the New Industrial Master Plan 2030, Green Investment Strategy and the National Semiconductor Strategy.
The Star
3 hours ago
- The Star
The race for engineering talent
THIS week, the first phase of a training deal between Malaysia and global chip design giant Arm Holdings PLC began to take shape, kicking off with 400 engineers being trained to design integrated circuits (ICs) using Arm technology. The idea is to get 10,000 Malaysian engineers trained this way in the next four years.
