THE Federation of Malaysian Manufacturers (FMM) has called on the Malaysian government to engage urgently with the United States over the newly imposed 24% tariff on Malaysian exports, warning that the move will have a profound impact on key industries and could lead to significant job losses and supply chain disruptions.
The tariff, which is set to take effect on April 9, 2025, covers major sectors including gloves, plastics, electrical and electronic goods, and industrial machinery.
In a statement issued today, FMM president Tan Sri Soh Thian Lai (pic) expressed serious concerns that the tariff increase would result in a sharp reduction in export volumes.
He also highlighted the risk of job pressures within affected industries and the potential for multinational operations based in Malaysia to reassess their sourcing and manufacturing strategies.
The impact could reverberate through the broader supply chain ecosystem, affecting suppliers, logistics providers, and downstream service sectors.
“The 24% tariff will weigh heavily on industries such as gloves, plastics, and electronics. We could see a sharp decline in export volumes, and significant job losses are a real possibility. Additionally, this move could cause major disruptions to supply chains, including those involving US-linked multinational companies operating in Malaysia,” said Soh.
He also urged the government to refrain from introducing additional tax burdens this year. FMM has voiced concerns that the implementation of new taxes, including an expanded sales and service tax (SST) set for May 2025, and an increase in electricity tariffs scheduled for July 2025, could place further strain on manufacturers, particularly small and medium enterprises (SMEs).
“The expansion of SST and rising energy costs will dramatically increase compliance and operational costs for manufacturers, particularly mid-tier and large firms, as well as SMEs, who are already facing significant challenges,” Soh explained.
“This, coupled with the impact of the new US tariffs, could strain the sector even further.”
The new tariffs were introduced by US President Donald Trump as part of his “Liberation Day” initiative, a measure designed to address what the US perceives as non-reciprocal trade arrangements.
The FMM has called for a moratorium on additional taxes and regulatory burdens in 2025 to prevent further harm to the industry and protect jobs.
To counter the effects of the US tariff hike, FMM has called for greater industry representation in Malaysia’s National Geoeconomic Command Centre (NGCC), a high-level task force tasked with coordinating responses to geoeconomic challenges.
Soh stressed that including business representatives would ensure that the practical realities of the manufacturing sector are considered in the development of mitigation strategies.
“The NGCC must present clear and verifiable evidence of Malaysia’s open import regime and reinforce that Malaysia does not impose protectionist duties. This will be vital in our efforts to seek a reconsideration of the tariff under the US reciprocal tariff mechanism,” said Soh.
Meanwhile, The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) has also voiced strong opposition to the US tariff hike, calling it “unreasonable and unnecessary” and warning that it could strain Malaysia-US trade relations.
ACCCIM president Datuk Ng Yih Pyng expressed concern that escalating trade tensions could escalate into a broader trade war, disrupting global supply chains and increasing costs for businesses and consumers alike.
“We believe these tariffs are harmful and could jeopardise trade relations between Malaysia and the US. The government must pursue diplomatic channels to address the trade imbalance and prevent the situation from worsening,” said Ng.
Ng also emphasised the need for the government to provide financial support and capacity-building programmes to help businesses navigate the challenges posed by the tariffs. He called for a greater focus on diversifying markets and reducing reliance on the US as a key trading partner.
“Businesses must stay agile and be prepared to explore alternative markets. The government should provide support to help firms mitigate the impact of these tariffs and seek new opportunities abroad,” Ng added.
As Malaysia prepares to face the full brunt of the US tariff hike, both the FMM and ACCCIM are urging the government to take swift action to safeguard the country’s export sector and avoid further strain on domestic businesses. The outcome of these efforts will be crucial in determining the future trajectory of Malaysia’s trade relations with the US and the broader global economy. - April 3, 2025
