01-08-2025
Latest tariff announcement by US govt lacks clarity due to vague terminologies, says think tank
THE Institute of Democracy and Economic Affairs (IDEAS) has expressed concern over the latest decision by the United States (US) government to impose a 19% tariff on Malaysian exports.
According to the think tank, US President Donald Trump's latest executive order solidifies his illiberal and punitive international trade agenda, imposing additional tariffs of between 10% and 41% on a range of countries, including Malaysia.
'While Malaysia's tariff rate of 19% is lower than the 25% initially outlined in President Trump's earlier announcement, the basis for this adjustment remains unclear,' it said in a statement on Friday (Aug 1).
'With implementation scheduled to take effect in just seven days, and no public disclosure of the concessions made during bilateral engagements, the announcement does little to alleviate the deepening uncertainty facing Malaysian exporters and international investors.'
IDEAS said in addition to the headline tariffs, the announcement raised several concerns:
The use of vague and undefined terms such as 'transshipment' which introduces legal and commercial uncertainty, particularly for firms operating within complex, integrated regional supply chains where goods may legitimately transit multiple countries, but now risk incurring a punitive 40% tariff;
The six-month review mechanismwhich creates a state of continuous instability for traders and investors, risking long-term investment decisions; and
Complex tariff treatment for goods in transit or storage, which adds to market disruption and casts doubts on the predictability of US trade enforcement.
'While the 19% is lower than the 25% initially threatened in Trump's June letter, we still have no clarity on what concessions Malaysian negotiators provided to secure this outcome,' IDEAS deputy research director Dr Stewart Nixon stated.
'The lack of transparency surrounding these unequal and needless negotiations is worrying. There are no winners from these tariffs.
'They create uncertainty, erode trust, and move global trade away from facilitative rules and governance, hurting Malaysian businesses and consumers alike.'
According to Nixon, the absence of clear definitions, credible enforcement mechanisms, and any assessment of cross-sector impacts makes outcomes highly uncertain.
He said trade remains disrupted, and the investment environment in a state of crippling static.
'It is important that this announcement brings an end to the Washington distraction and that ASEAN leaders refocus on the urgent task of reinforcing ASEAN centrality, diversifying and deepening ties with countries that support free and fair trade,' he added.
It was reported earlier today that Malaysia will now face a 19% tariff on exports to the US, down from the previous 25%.
This comes after Trump signed an executive order on July 31, 2025 modifying the reciprocal tariff rates for certain countries.
Recall that Trump had initially announced a 24% tariff on goods imported from Malaysia in April this year, which was later increased to 25% in July, the latter originally set to take effect beginning August 1.
The newly revised tariff rate will come into effect on 12.01am EDT on Aug 7, 2025 (12.01pm MYT on the same date). ‒ Aug 1, 2025
Main image: The Edge
