Tariff delay gives M'sia time to secure better trade terms: CIMB Securities

Malaysia still has time to negotiate better terms following the United States’ decision to defer its tariff enforcement date to Aug 1, 2025, from the earlier scheduled date of July 9, CIMB Securities Sdn Bhd said.

In a note today, the research firm said the US had signalled that the tariff rate could be adjusted downward if Malaysia agreed to remove specific tariff and non-tariff barriers or committed to direct investments in US manufacturing facilities.

It noted that the market had expected a lower tariff rate, especially after Vietnam successfully negotiated a reduced rate of 20 percent, compared to its earlier reciprocal tariff of 46 percent.

However, the firm said US President Donald Trump’s decision to impose a 25 percent tariff on Malaysian exports - exceeding the earlier reciprocal tariff rate of 24 percent - adds to external headwinds.

This is particularly for export-oriented sectors such as electronics, machinery, gloves, and furniture, which have significant exposure to the US market.

“This development poses downside risks to our 2025 gross domestic product (GDP) growth forecast of 4.3 percent, which is premised on a more moderate 10 percent tariff scenario.

“Earlier simulations suggest that a 24–25 percent tariff could reduce growth by up to 0.3 percentage point (pp), implying a revised baseline of around 4.0 percent in the absence of a better deal,” it said.

For now, CIMB Securities is maintaining its 4.3 percent GDP growth forecast, pending greater clarity ahead of the new enforcement deadline, but with a clear downside bias if trade talks fail to yield a more favourable outcome.

Nonetheless, the research firm said it is maintaining its KLCI earnings forecasts and index target of 1,560 points, with the impact of higher US tariffs already factored into its projections.

“We expect the KLCI to remain range-bound in the near term, with downside risks as the market assesses Malaysia’s prospects of negotiating lower tariff rates,” it added.

- Bernama

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