KUCHING: The Center for Market Education (CME) has welcomed a recent United States court ruling rejecting sweeping reciprocal tariff measures, describing it as a reaffirmation of rule-based trade governance at a time of rising global protectionism.
The economic think tank said the decision sends a broader signal that economic prosperity cannot be secured through retaliatory trade policies.
However, CME cautioned against discussions in the United States about introducing new broad-based tariffs, warning that replacing one form of protectionism with another would not resolve underlying economic distortions.
“Whether labelled reciprocal, strategic or universal, trade restrictions remain distortive interventions that weaken the foundations of economic dynamism,” it said in a statement yesterday.
CME argued that both tariff and non-tariff barriers fragment supply chains, restrict access to technology and capital, reduce competitive pressure and constrain entrepreneurial activity.
Citing a recent policy brief, it noted a strong negative correlation between trade barriers and innovation performance, adding that economies with higher restrictions tend to exhibit weaker innovative capacity.
Open systems, it said, enable the circulation of ideas, goods, capital and talent — all critical to sustainable growth driven by entrepreneurial discovery and creative destruction.
“Protectionism shields existing structures; it does not generate new combinations,” it said, adding that such measures often protect inefficiency and politically connected interests at the expense of long-term competitiveness.
CME stressed that free trade is not a concession granted by one country to another, but a mutually beneficial framework grounded in voluntary exchange.
Tariffs, it said, function as taxes on domestic consumers and producers, raising prices and distorting decision-making.
It also outlined three core benefits of open trade: expanding consumer and business choices, disciplining domestic producers through competition and facilitating the international division of labour — a key engine of productivity growth.
Referring to Malaysia’s development as a tradedependent and export-oriented economy, CME said integration into global value chains, foreign direct investment and technology transfer had been made possible by relatively open markets.
“Attempts to retreat from openness would not shield the country from global volatility — they would isolate it from opportunity,” it said.
CME urged policymakers to maintain a predictable, rulesbased trade regime, reduce non-tariff barriers, streamline customs procedures and deepen integration within ASEAN and broader multilateral frameworks.
“Retaliatory spirals rarely generate strength; they generate stagnation,” it added, concluding that economic resilience is built by strengthening bridges, not erecting walls.
