Malaysia rules out retaliatory tariffs, explores measures to mitigate export impact

KUALA LUMPUR: The Ministry of Investment, Trade & Industry (MITI) takes the recent 10% tariff hike and reciprocal tariffs imposed by the United States on Malaysian exports seriously and is actively engaging with US authorities to seek solutions that uphold the spirit of free and fair trade. “In upholding such spirit, Malaysia is not considering retaliatory tariffs,” it said in a statement. MITI noted that the US tariffs affect many countries with potentially significant implications for global trade and growth.

The National Geoeconomic Command Centre (NGCC), recently approved by the Cabinet, will assess the impact of the US announcement and explore a comprehensive, multi-pronged strategy to mitigate the effects of these tariffs on the economy and industries. The NGCC’s key focus is to ensure the Malaysian economy remains competitive amidst these volatile times. “Malaysia will utilise the Trade and Investment Framework Agreement (TIFA) to seek reciprocal trade gains and pursue a Technology Safeguards Agreement with the US to facilitate high-tech cooperation in semiconductors, aerospace, and digital economy sectors,” MITI said.



According to the US Bureau of Economic Analysis, Malaysia ranks 15th on the US list with a trade surplus of US$24.8bil in 2024. Although the US has a trade deficit in goods with Malaysia, it enjoys a surplus in services, showing strong economic ties that benefit both countries by supporting jobs and growth.

This deficit is also partly due to many US companies that have operated in Malaysia for decades, drawn by the country’s strong industrial ecosystem, especially in the E&E sector. “We acknowledge that President Trump's tariff hike poses a significant challenge to global trade dynamics. While respecting such sovereign decisions, Malaysia strongly believes in constructive engagement for mutually beneficial economic relations.

MITI is committed to safeguarding Malaysia's economic interests and maintaining strong trade relations with the US,” MITI said. To mitigate tariff impact, Malaysia is expanding our export markets by prioritising high-growth regions and leveraging existing Free Trade Agreements (FTAs) including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the Regional Comprehensive Economic Partnership (RCEP). Malaysia will also foster new partnerships within Asean and enhance Malaysia’s supply chain resilience by accelerating the implementation of key industrial policies like the New Industrial Master Plan 2030 (NIMP 2030) and the National Energy Transition Roadmap (NETR).

“The Government is engaging with the affected industries, while exploring support programmes to help businesses adapt. MITI remains committed to open dialogue and collaboration to resolve trade disputes and promote mutual prosperity,” it said, adding that Malaysia is approaching this challenge with strength and preparedness, backed by robust economic fundamentals..