Tengku Zafrul, Anwar to engage US officials ahead of 25% tariff imposition
Prime Minister Datuk Seri Anwar Ibrahim is also expected to meet US Senator Marco Rubio on the sidelines of an Asean-related event, as both nations step up diplomatic engagement ahead of the Aug 1 deadline.
The talks come amid mounting pressure following Washington's decision to impose a 25% import tariff on Malaysian goods — an increase from the 24% announced in April.
Zafrul said discussions remain ongoing at multiple levels.
'The fact that both sides are still talking is encouraging,' he said.
On Monday, US President Donald Trump sent a letter to Anwar, which he later shared publicly on his Truth Social platform.
In the letter, Trump pointed to Malaysia's 'tariff, non-tariff policies, and trade barriers' as justification for the hike, describing them as persistent obstacles to fair trade.
Malaysia has been in negotiations with Washington since April to roll back the earlier 24% rate, with the most recent round held on June 18.
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The Star
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Muted growth likely in 2H25
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'Even if the tariff imposed by the United States on China is higher, it also depends on how high, because even before tariffs, China has been very competitive in most markets,' Lee said during SERC's Malaysia Quarterly Economy Tracker (April to June) 2025 media briefing yesterday titled 'The Future Ahead: Malaysia in a Changing Landscape'. Lee noted that Chinese exporters have economies of scale and government support in the form of subsidies, export rebates and other incentives. 'This allows them to undercut prices in a bid to gain more market share in the United States,' he said. Lee added China could also engage in price wars to sell its products in other markets to help offset its lower sales in the US market, should it end up securing a relatively higher tariff from Washington. China's economy still remains challenging looking ahead and is projected to slow further in the second half of 2025 (2H25), Lee said, as the trade tariff impact continues and weakening consumer sentiment amid lingering risks in the property sector. On Monday, the Trump administration extended its tariff truce with China for another 90 days to Nov 10. This move keeps US tariffs on Chinese imports at 30%, while Chinese duties on US goods remain at 10%. Without the extension, Chinese imports into the United States would have faced tariffs of 145%, while US goods entering China would have been hit with a 125% rate. These tariffs were set to resume on Tuesday. SPI Asset Management managing director Stephen Innes said the tariff truce 'isn't peace, it's halftime'. 'The scoreboard hasn't changed much, but both sides are in the locker room drawing up plays for the next quarter. The sledgehammer hasn't been put back in the closet – it's just leaning against the wall, waiting for November,' he said in a statement. Lee stressed that halting trade with the United States is not feasible and reduced exports to this key market would directly impact Malaysia's overall export performance. This is given that the United States is Malaysia's third-largest trading partner, accounting for 11.3% of the country's total trade in 2024. It is also Malaysia's second-largest export destination and one of the top-five sources of foreign direct investment (FDI). 'The tariff on local furniture exports, for instance, was 0% previously, but now it has been raised to 19%. Manufacturers may not be able to adjust immediately and this will affect their profit margins and overall profitability. 'However, they have to find ways to mitigate the impact by improving their costs and efficiency,' he said. Lee said the country's exports are expected to remain weak in 2H25 and 2026 due to the impact of the US sweeping tariffs on the global economy and trade flows. Malaysia's export performance has been on the decline in the last two months. 'Exports remain in cautious territory, with a growth of 3.8% in the first six months of the year. For the full year, exports are expected to decline significantly and could even register a slight contraction. 'Exports' 'front-loading' effects are expected to fade in 2H25,' he said. On the whole, Lee said Malaysia is expected to sustain 'moderate growth' in 2H25 and 2026, in line with the global trend. This is underpinned by private consumption and investment amid weak exports due to the impact of the US tariffs on exports. 'We remain positive on private investment with ongoing initiatives like the New Industrial Master Plan 2030, National Energy Transition Roadmap, National Semiconductor Strategy and the 13th Malaysia Plan (2026-2030). 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In the meantime, he stressed that it was important for Malaysia to enhance its tax competitiveness and ease of doing business to remain relevant as an investment destination amid current trade uncertainties. In this regard, Lee calls for measures like cutting the corporate tax rate from 24% to 22% and increasing the threshold for small and medium enterprises enjoying a preferential tax rate of 15% for the first RM2mil chargeable income. SERC projects Malaysia's gross domestic product growth to slow to 4% in both 2025 and 2026. It expects inflation to remain in the range of 1.5% to 1.8% for the year, and between 2% to 2.5% in 2026. According to Lee, the growth outlook overall remains tilted to the downside, stemming mainly from sluggish global trade, subdued investor confidence and disappointing commodity output. 'Persistent external uncertainties along with weak implementation of the various masterplans could weigh on domestic demand, especially investment,' he said. 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