Malaysia says import taxes from the US could hurt the economy for many years

The new tariffs will affect almost all of Malaysia’s trading and investment partners, so the country is preparing for their potential long-term economic impact.

Tengku Datuk Seri Zafrul Abdul Aziz, Minister of Investment, Trade, and Industry, said that the government is taking steps to deal with the effects of the taxes. He stated that the government is forming a task group to gather feedback from stakeholders, assessing the impact on businesses, and maintaining collaboration with Washington. Zafrul wants to meet with US leaders by the end of the month.

It is one of the US’s biggest trading partners in ASEAN, and it also gets a lot of funding from the US, the minister said at a briefing in Kuala Lumpur on Monday. “So, we have to admit that there will be effects in the mid- to long-term.”

Zafrul said that the direct hit will include less demand and income, as well as less spending on investments. He also said, “In the long run, it may cause Malaysia’s GDP to go down and global growth to slow down.” He also said that the government is watching out for the possible dumping of imported items.

Zafrul said Malaysia’s “moderate” tax rate may make its goods more competitive globally. Furthermore, the country will make some money from exporting palm oil because people will choose cheaper alternatives, he said.

Malaysia was optimistic at the start of the year, but now they’re reviewing their 2025 GDP growth goal in case tariffs take effect on April 9. It lost 0.6% against the US dollar on Monday, making it one of the worst performers in Asia. As much as 5.7% fell in one day, making it the biggest drop in the Kuala Lumpur benchmark stock index since the start of the COVID pandemic.

The country also wants to be responsible for coordinating a reaction from the rest of the region to the tariffs. Some of the worst-hit countries are in the Association of Southeast Asian Nations. Vietnam and Cambodia were hit with rates of 46% and 49%, respectively, by the Trump administration, and Malaysia is hit with a 24% tax.

Like other countries in the region, Malaysia has decided not to fight back against the harsh trade changes and instead wants to work with the US. However, it has denied that it puts a 47% tax on US goods. – Bloomberg