THE United States’ imposition of tariffs is projected to reduce Malaysia’s gross domestic product by between 0.6 and 1.2 per cent compared to earlier forecasts, according to preliminary analysis by the Ministry of Investment, Trade and Industry (MITI).
“For 2026, GDP growth is also expected to decline slightly compared with 2025, as the impact of the tariffs will be felt throughout the year,” said Minister Tengku Zafrul Abdul Aziz in a written parliamentary reply.
He was responding to a question by Datuk Dr Richard Rapu @Aman Anak Begri (GPS–Betong), who sought the ministry’s assessment of the short- and long-term effects of rising global tariffs on inflation, local industrial production costs, and consumer prices—particularly in essential sectors such as food, energy, and transportation.
Zafrul noted that while the full inflationary impact on essential sectors remains unclear, the government is actively implementing integrated measures to mitigate the risks of the 19 per cent tariff and its potential drag on economic growth.
“The government remains committed to proactive and integrated measures to minimise the negative effects of the 19 per cent tariff on the nation’s economic growth, especially in essential sectors such as food, energy, and transportation, over the medium and long term,” he said.
Among the government’s mitigation strategies are enhanced inter-agency and cross-ministerial coordination via a whole-of-government approach, encouraging exporters to maximise the use of Malaysia’s 18 Free Trade Agreements (FTAs), and driving forward industrial reform initiatives to raise productivity, promote automation, and improve competitiveness.
“The government is confident that the planned measures will effectively and comprehensively address the negative impacts of the United States’ retaliatory tariffs without compromising the people’s well-being,” Zafrul said.
“Ensuring access to essential needs remains the government’s top priority in formulating policies and strategic initiatives to deal with this issue.
“At the same time, these strategies will not only strengthen the global competitiveness of local companies but also open new opportunities to expand markets and enhance the resilience of the national economy in facing various unforeseen challenges.” - August 19, 2025
