14 hours Ago
BAKER Nuradilla Hamdan is concerned about the ripple effects of the United States’ recent and impending tariffs on imports from several countries. The 28-year-old single mother from Cheras worries that the rising costs of imported ingredients, such as butter, may eventually force her to raise the prices of her cakes. “In my five years as a baker, I’ve learned that price increases can be unpredictable.
I’m already paying more for butter and wheat flour, which means my cakes are becoming more expensive. But I can’t keep passing the cost onto my customers,” she says. The US recently imposed a 25% tariff on imports from Mexico and Canada, along with a 10% increase in duties on Chinese goods, which came into effect on March 4.
US President Donald Trump has also announced reciprocal tariffs on the rest of the world, to come into effect on April 2. This has raised concerns about the potential impact on Malaysian food security and affordability, particularly as Malaysia imports over 60% of its food needs. Beyond price hikes, experts warn that escalating trade wars could fuel global protectionism.
Adding to the uncertainty is the unpredictable nature of US tariff policies – just last week, Trump signed orders significantly expanding exemptions for goods from Canada and Mexico, leaving policymakers scrambling to adapt to shifting trade conditions. (Then at press time Trump threatened other new tariffs, including a 250% tax on Canada’s dairy products.) Nevertheless, some Malaysian economic and geopolitical experts believe the new tariffs could indirectly benefit Malaysia if affected countries shift their trade focus to this region.
Economist and president of the Malaysian Economic Association Prof Dr Yeah Kim Leng says that due to a likely loss of market share in the US for Canada and Mexico, they may choose to increase their food exports to regions such as Asia. “Higher prices in the US market will likely lead to loss of market share of Canadian and Mexican goods, creating opportunities for other trade partners with lower or no tariffs to increase their exports to the US. “Also, arising from a loss of US market share, Canadian and Mexican food producers could increase food exports such as meat, seafood, grains, cereals, and dairy products, thereby providing Asian consumers – including Malaysia’s – with more choices and possibly at lower prices,” says Prof Yeah, who is also on the Finance Minister’s panel of special advisers.
Another who believes Malaysia may inadvertently become a beneficiary of US tariffs is Dr Oh Ei Sun, principal adviser for the Pacific Research Centre of Malaysia. “As America itself is more than self-sufficient in food and is a major exporter of agricultural produce and products to the rest of the world, the tariffs are not expected to significantly impact the prices of food items. “If anything, Canada and Mexico will now be encouraged to export more to the rest of the world, and we should see more reasonable prices on Canadian wheat and Mexican beans, for example,” Oh says.
What the tariffs are expected to impact are the supply chains in the affected countries, according to Prof Yeah, who says the increased prices for consumers in those countries will eventually lead to a “reconfiguration” of their supply chains. “The tariffs will force the two traditional trading partners of the US to seek alternative markets, including the fast-growing Asian countries such as China and Malaysia.” Prof Yeah says such a diversion of Canadian and Mexican food trade to this part of the world could potentially lead to lower food prices due to more intense competition with existing suppliers already entrenched in Asia’s markets.
“Trade wars also tend to lead to currency depreciation of the affected countries. “In this case, from a food importer’s perspective, Malaysia will gain from the ringgit strengthening as the imports will be cheaper when converted to ringgit.” However, while Malaysia could benefit indirectly from the tariffs, he points out that tariff wars typically cause demand to shrink, so Malaysians should brace for a weaker global economy.
“World food prices could be more volatile and uneven across markets due to varying speed of market adjustments to the tariffs. “The duration of the tariffs is also uncertain depending on country leaders’ ability and willingness to negotiate and compromise,” says Prof Yeah. Similarly worried about the implications of a weaker global economy are consumer groups who are raising concerns that the tariffs could disrupt global trade.
Federation of Malaysian Consumers Associations vice- president Datuk Indrani Thuraisingham says Malaysia’s concerns about food security is nothing new as the country imports far more food than it exports. Disruptions to global trade dynamics could eventually lead to increased prices for certain imported food items, she says. “Products such as grains, beef, and fresh produce, which Malaysia imports from these countries, could see price hikes due to altered supply chains and increased demand from other markets.
” She points to Brazil as an example; US tariffs have led to increased demand from China for Brazilian agricultural products, causing local prices to surge in Brazil. “A similar shift could affect Malaysia’s imports,” Indrani says. She also says that Malaysia could improve logistics and storage facilities to offset some price increases.
Consumer Choice Centre Malaysia country representative Tarmizi Anuwar says increased costs for essential electronics and supply chain uncertainties caused by the tariffs could also indirectly affect food prices through higher operational costs. Both Tarmizi and Indrani also say a stronger US dollar amid the depreciating currencies of the affected countries could make food imports more expensive for Malaysia. “A stronger dollar can increase the cost of commodities priced in dollars, such as grains and oil, thereby raising Malaysia’s food import bills,” says Indrani.
To mitigate the impact for consumers and businesses, Indrani says the country should reduce its reliance on any single country by sourcing from multiple nations, as well as improve logistics and storage facilities to offset some price increases. “Reducing reliance on any single country by sourcing from multiple nations can help stabilise supply and prices.” Malaysia is also particularly vulnerable to any drastic changes to the global supply chain due to our reliance on imported food.
That is why Oh says it is now timely for Malaysia to build up its own food resilience capabilities. “For too long this country has focused on the cultivation and processing of cash crops as a major foreign exchange earner. “This came at the expense of the cultivation and processing of food crops to meet our own dietary needs, resulting in most of our food items being imported.
“It is time for a more balanced overall policy between cash and food crops so that we can be less exposed to the vagaries of international price fluctuations of food items,” he says..
