Malaysia says US tariffs may weigh on economy for years to come; setting up task force

KUALA LUMPUR – Malaysia is bracing itself for the possibility that

US President Donald Trump’s tariffs

will leave a lasting impact on its economy for years to come, given that nearly all its trading and investment partners will be affected by the new regime.

The government is taking measures to address the tariffs’ impact, said Malaysia’s Minister of Investment, Trade and Industry Tengku Zafrul Aziz.

These include setting up a task force to gather feedback from stakeholders, assessing the impact on industries and continuing its engagement with Washington, he said.

Datuk Seri Zafrul is seeking meetings with US officials by the end of the month.

“We are one of the US’ largest trading partners in Asean and also one of the major recipients of US-based foreign investment,” he said at a briefing on April 7 in Kuala Lumpur.

“We must, therefore, acknowledge that there will be mid- to long-term impact,” he said.

The direct hit will include reduced demand and revenue, as well as conservative investment spending, Mr Zafrul said.

“In the long run, it may lead to a decrease in Malaysia’s GDP (gross domestic product) and a slowdown in global growth,” he added.

The Malaysian government is also looking out for the potential dumping of imported goods, he said.

Gains amid gloom

Still, Malaysia’s “moderate” tariff rate could see some of its exports becoming more competitive in the global market, Mr Zafrul said.

Malaysia will also see some gains over palm oil exports as consumers opt for cheaper substitutes, he added.

After starting off the year on an optimistic note, Malaysia is now reviewing its GDP target for 2025 should the tariffs come into effect on April 9.

The Malaysian ringgit was one of the biggest losers in Asia on April 7, weakening 0.6 per cent against the US dollar.

The Kuala Lumpur benchmark stock index slumped as much as 5.7 per cent, its biggest intraday drop since the start of the Covid-19 pandemic.

Malaysia is also seeking to lead efforts to coordinate a regional response to the tariffs.

Countries in Asean are among those hardest hit: Vietnam and Cambodia were slapped with rates of 46 per cent and 49 per cent, respectively, by the Trump administration, while Malaysia is subject to a 24 per cent levy.

Like its regional peers, Malaysia

has opted not to retaliate

against the punishing trade overhaul and is seeking engagement, though it has refuted the Trump administration’s claim that it imposes a 47 per cent levy on US goods. BLOOMBERG