KUCHING: Malaysia could benefit from pursuing a free trade agreement with the United States to mitigate the impact of newly imposed tariffs, says Datuk Jonathan Chai Voon Tok
Commenting on the latest 24 per cent tariff placed on Malaysian exports by the US, the Associated Chinese Chambers of Commerce and Industry of Sarawak (ACCCIS) secretary-general noted that although the rate is lower than those imposed on some ASEAN countries—such as Vietnam, which faces tariffs between 46 to 49 per cent—the move adds pressure to local manufacturers.
He said the prevailing uncertainty and disruptions in the global supply chain may compel companies to reassess their cost structures or seek out alternative markets.
“Malaysian manufacturers—especially those in electronics, machinery, palm oil, and rubber products—are now facing higher export costs due to the new 24 percent tariff imposed by the US. This additional cost makes Malaysian goods more expensive for US buyers, potentially reducing demand and squeezing profit margins.
“In response, businesses might need to diversify their export destinations or enhance their value proposition to remain competitive.
“In parallel, accelerating discussions for key trade agreements with the European Union and the Gulf Cooperation Council—as well as leveraging existing agreements such as the Regional Comprehensive Economic Partnership, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, and the China–ASEAN Free Trade Agreement—will be crucial in expanding Malaysia’s trade opportunities,” he told Sarawak Tribune when contacted today (Apr 5).
Chai added that although the tariff directly targets exports, the ripple effects may eventually reach local consumers.
“Reduced export revenues could force exporters to cut production or raise domestic prices to cover losses, thereby contributing to inflation.
“Additionally, industries affected by the tariffs might scale back expansion or even reduce their workforce, impacting job prospects and local economic growth.
“Over time, these factors could drive up the cost of living and weaken consumer confidence while also causing short-to-medium term disruptions in global trade,” he added.
Chai mentioned that while Malaysia’s direct exposure is moderate compared to larger economies like China or the EU, the indirect effects—from potential price hikes and reduced export competitiveness to broader market instability—could significantly influence both the domestic economy and Malaysia’s position in the global market.
“There will be daunting challenges and repercussions ahead and we could brace for near term volatility but hopefully, things would settle down sooner with gradual recalibration as we anticipate active engagements and negotiations among countries and the major players.
“Global financial markets have already reacted to these measures, with sharp fluctuations in the stock markets indexes, commodities markets as well as the exchange rates of major currencies, adding uncertainties to the investment environment and global economy.
“Indeed, these tariffs are a piece of escalating trade protectionism puzzle,” he stated.
