The on-again, off-again Trump tariffs on foreign-made goods are now back on again, as US president Donald Trump will reinstate a 25% tariff on products produced in Malaysia from August 1, Malay Mail has reported. In a letter sent to Yang di-Pertuan Agong Sultan Ibrahim Iskandar – ostensibly billed as an invitation to participate in the “number one market in the world” – the commander in chief said the move is aimed at redressing a trade deficit stemming from Malaysia’s “Tariff, and Non Tariff, Policies and Trade Barriers.”
He added that this so-called “reciprocal tariff” is separate from all sectoral tariffs and will be applied even to goods transhipped (i.e. moved from one ship to another during transit) to evade the said tariff. “There will be no tariff if Malaysia, or companies within your country, decide to build or manufacture product within the United States and, in fact, we will do everything possible to get approvals quickly, professionally and routinely — in other words, in a matter of weeks,” he said in the letter posted to Truth Social.
Trump added that the current “unsustainable” trade deficit is “a major threat to our economy and, indeed, our national security!” He warned that if Malaysia reciprocates by imposing taxes on US-made goods, the US will further raise the said tariff by the same amount.
“If you wish to open your heretofore closed trading markets to the United States, and eliminate your Tariff, and Non Tariff, Policies and Trade Barriers, we will, perhaps, consider an adjustment to this letter,” Trump said. “You will never be disappointed with the United States of America.”
Trump previously announced a base tariff of 10% on all countries in April, along with an additional “reciprocal tariff” on nations with a perceived trade deficit, including a 24% tariff on Malaysia. He then walked back on his decision just a week later, applying the 10% rate across the world (except for China, with which the US is still embroiled in a trade war) for 90 days while negotiations take place. Evidently, those three months are up.
While Malaysia currently does not export cars to the US, it is a global player in the supply of automotive components, particularly semiconductors. Thankfully, semiconductors are currently exempt from the tariff, said Penang chief minister Chow Kon Yeow, whose state’s economy is reliant on exports.
He added, however, that the broader implementation of the tariff “still poses an economic risk,” and that the variations in tariff rates across ASEAN could distort trade dynamics and influence future investment decisions across the region.
“Between January and May 2025, Penang accounted for 55% of Malaysia’s total exports to the US, valued at RM52 billion,” he said. “Electrical machinery and equipment constituted 77% of Penang’s exports to the US, with a large share driven by the semiconductor industry.”
Chow said the Malaysian government urgently needs to continuously engage with its US counterparts to negotiate for a lower tariff rate, adding that Penang “will continue to work closely with the federal government and industry players to safeguard the nation’s economic interest.”
It also goes without saying that the tariff could very well lead to inflation in Malaysia, which will drive up prices of goods, including cars.
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