IN a significant move amid the ongoing global trade war, the United States has announced a 24% countervailing tariff on imports from Malaysia.
This decision, revealed by President Donald Trump on Wednesday, marks a new phase in his administration's aggressive stance on trade, imposing unprecedented tariffs on imports from various countries that engage in trade with the US.
Among the countries hit with substantial countervailing tariffs, China faces the highest at 34%, followed by the European Union with a 20% levy. Other countries affected include Vietnam at 46%, Sri Lanka at 44%, Cambodia at 49%, Laos at 48%, and Myanmar at 44%.
Trump commented on the tariffs, saying, “These tariffs are not fully retaliatory. I could impose full retaliation, but it would make things difficult for many countries. We don’t want that to happen.”
According to data compiled by Reuters, Malaysia is listed as having a trade deficit of US$25 billion with the US, a situation where the country exports more to the US than it imports. In contrast, China has a significantly larger trade deficit with the US, amounting to US$295 billion.
The total trade between Malaysia and the US reached RM324.9 billion in 2024. The US remains Malaysia’s third-largest trading partner, contributing 11.3% to the country’s overall trade volume.
While the announcement of higher tariffs from the United States initially sparked a brief relief rally on global markets, investor sentiment in Asia is expected to sour as the full impact of the tariffs on specific countries, including China, sinks in.
China is facing a significant 34% tariff on its imports to the US, while Japan is now subject to a 24% duty. However, Vietnam and Cambodia are facing even steeper levies, at 46% and 49% respectively.
"While this caused an initial relief rally globally, sentiment in Asia is likely to deteriorate as the market digests the higher tariffs directed at specific countries, including China," Bernama cited ActivTrades investor and global macro analyst Anderson Alves in his market commentary.
Alves warned of a broad 'risk-off' environment in Asian markets on Thursday, with the US dollar expected to outperform regional currencies.
"The technology and semiconductor sectors are likely to mirror the declines in the US market, where the tech-heavy Nasdaq reversed earlier gains, closing 3% down," he added.
A major point of focus for investors will be China’s response to the US tariffs.
"Market operators will keep a close eye on China's response to the announced US tariffs. Some expect China to close the tap on investment in the US in order to strengthen its negotiation position in US trade talks," Alves noted.
The White House has indicated that any retaliatory measures by foreign nations will be met with a reciprocal response from the US. This trade conflict is likely to remain the primary driver for market movements in the coming days, Alves concluded. – April 3, 2025
