By Adie Zulkifli – April 11, 2025 @ 8:34pm
New Straits Time
ALOR STAR: The Malay Chamber of Commerce (DPMM) Kedah chapter today voiced serious concerns over the significant impact of the United States’ sweeping reciprocal tariffs on the country.
While Malaysia is not among the countries subjected to across-the-board high tariffs like other countries, certain local products would still be affected, which has both direct and indirect implications on the nation’s trade landscape.
“From an indirect perspective, there is potential for increased competitiveness of Malaysian exports in the global market.
“In this context, Malaysian products — particularly intermediate goods — could become more attractive to American companies compared to those from countries facing higher tariffs.
“Several of Malaysia’s key export categories, such as semiconductors, critical mineral materials, pharmaceuticals and energy-related products have reportedly been excluded from the tariff list.
“This exemption provides some relief, considering the semiconductor industry is the largest contributor to Malaysia–US bilateral trade,” it said in a written reply to the New Straits Times.
Nevertheless, it stressed that many other sectors were expected to be significantly affected.
“Industries such as furniture, machinery and equipment, rubber, plastics and other manufacturing sectors that play a crucial role in supporting Malaysia’s small- and medium-scale enterprises (SMEs) are likely to face declining demand.
“A sluggish global economy will reduce demand for the country’s exports, in turn impacting revenue and job opportunities in the affected sectors.
“For the local business community, the implementation of these tariffs raises concerns about the continuity of operations and company expansion plans,” it added.
Kedah DPMM said investors were expected to adopt a more cautious approach, slowing down investment, cutting expenditure and reassessing their market strategies.
It projected that market focus is likely to shift towards regional areas such as China, India, and the Asean country members, as a strategy to reduce dependence on a single market like the US.
“Kedah DPMM also wishes to draw attention to the risk of import surpluses from countries experiencing excess production capacity due to restricted access to the US market.
“Such surpluses carry the potential for dumping practices, which would suppress local market prices and harm domestic producers. This situation could intensify unhealthy competition in the domestic market, ultimately squeezing the profit margins of local companies,” it said.
On a broader level, Kedah DPMM warned that escalating trade tensions also posed a risk to global supply chains.
It pointed out that many contract manufacturing firms and international producers were expected to reassess their production locations, and this could directly affect Malaysian industry players who were part of the global supply ecosystem.
“Moreover, an increasingly uncertain economic climate could hamper foreign direct investment (FDI) into Malaysia and cause domestic investors to postpone business expansion decisions,” it added.
To mitigate these challenges, Kedah DPMM urged the government to take proactive and comprehensive measures to cushion the impact of the US tariffs policies.
“Key recommendations include the provision of mitigation plans and support for the export sector, such as special assistance funds, investment incentives and SME-friendly financing facilities.
“Additionally, the government should strengthen efforts to promote exports to alternative markets by organising business matching programmes, participating in international trade exhibitions, and forming strategic bilateral partnerships,” it said.
“The chamber also called for protection mechanisms for local producers to be reinforced through the enforcement of anti-dumping policies and stringent technical controls.
“It is equally important that the government provides assurances to investors that Malaysia remains a stable, competitive and open investment destination,” it said.
Kedah DPMM believed that with the support of the government, cooperation from the private sector and the resilience of local entrepreneurs, Malaysia can adapt, recover and strengthen its position within the global value chain.
“We call on all parties to remain united, disciplined, and prepared to face an increasingly challenging economic environment for the sake of business sustainability and national wellbeing,” it said.
In response to President Donald Trump’s announcement, Prime Minister Datuk Seri Anwar Ibrahim regretted the decision as “unjustified and based on a questionable approach”.
Malaysian International Chamber of Commerce and Industry (MICCI) had recently warned that the Trump administration’s tariffs shock could lead to as many as 50,000 direct and indirect job losses.
Its president Christina Tee said the key risk sectors included electronics, gloves and automotive parts, where export-linked production volumes might contract significantly, particularly impacting SMEs.
On Tuesday, Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz said he would lead Malaysia’s delegation to Washington at the end of this month to discuss the issue.
On Wednesday, while announcing a 90-day tariff pause on dozens of countries, Trump ratcheted up tariffs on Chinese imports, raising them effectively to 145 per cent when levies imposed earlier this year are taken into account.