M'sia to continue talks with US before tariff rate is finalised in August

The government will continue negotiations with the United States following the imposition of a 25 percent retaliatory US tariff on Malaysian exports.

Prime Minister Anwar Ibrahim said that during the negotiations, Malaysia will present its arguments to the US before the tariff rate is finalised in August.

“We have sent teams to negotiate and explained the position that ours is a trading nation, and therefore, (the tariff) would impact the economy of this country and that of the region negatively.

“Of course, we must maintain our relationship with the US, but we will also defend our position that Malaysia is a trading nation, so we will request that the tariff rate be reconsidered,” he told reporters.

Anwar was speaking after officiating the 58th Asean Foreign Ministers’ Meeting (AMM) at the Kuala Lumpur Convention Centre (KLCC) today.

Commenting further, Anwar said he would also raise the issue of tariffs during a meeting with US Secretary of State Marco Rubio tomorrow.

Rubio is in Malaysia this week to attend several high-level regional meetings and bilateral engagement sessions, marking his first visit to Asia since taking office earlier this year.

Higher tariff

The US announced it will impose a higher 25 percent tariff on all Malaysian products exported to the US, effective Aug 1 this year, separate from all sector-specific tariffs.

This figure is one percentage point higher than the tariff previously announced in April.

In a letter to Anwar uploaded on the Truth Social account on Monday, US President Donald Trump stated that the 25 percent figure is still far lower than what is required to eliminate the trade deficit imbalance the US is experiencing with Malaysia.

Trump said that there would be no tariff if Malaysia or Malaysian companies decide to build or manufacture products within the US.

Malaysia has been negotiating to reduce the tariff with Washington since April, with the most recent round held on June 18.

Optimism remains

Malaysia remains optimistic about the outcome of its tariff negotiation with the US, banking on certain sectors that could be favourable to both countries, said Minister of Investment, Trade and Industry Tengku Zafrul Abdul Aziz.

He said sectors where Malaysia is strong, such as the semiconductors sector, could provide a win-win proposition for both countries.

“I am optimistic, especially in sectors where I feel there is a win-win (factor) and they complement each other.

“Malaysia is a key player in the semiconductor sector, which supports the supply chain for the US semiconductor ecosystem. So we need to continue the discussion,” he said during an online discussion at Reuters Next Asia in Kuala Lumpur.

Zafrul said that he has been engaging with the US trade representative as recently as yesterday, and both parties agreed that they could continue negotiating as they still have time until Aug 1.

“There are challenges, of course, there are issues that we still need to resolve. Many have been resolved, but unfortunately not according to the timeline that was set… with the announcement by Trump, we have a few more weeks of extension to negotiate on the final terms,” he said.

He added that one of the issues raised was the trade balance.

“Malaysia has a positive surplus against the US. Our trade surplus last year was around US$25 billion (RM106.3 billion).

“The US administration wants to see this reduced, and also in areas where they feel that there is red tape on certain products, such as agriculture (and) halal. So these are issues which we need to address.

“We’re still discussing, of course, there are red lines as well,” he said.

Zafrul added that the parties had also talked about digital tax and issues pertaining to imports of certain products that may be harmful to Malaysia’s industries.

“So these are things which we are still negotiating on, but most of the issues, external ones, have been resolved. I believe that the time given - Aug 1 - will give us more avenues to resolve issues that have yet to be addressed,” he added.

- Bernama

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