Trump's Reciprocal Tariffs Policy

Barely three months returning to the White House after swearing in on 20 Jan 2025, President Donald Trump has imposed tariffs from universal baseline tariffs to country-specific tariffs on goods from Canada, Mexico, and China, which have sparked retaliatory tariffs. This marks a continuation of his tariff-focused policies from his first term in 2017–2020, reaffirming his administration’s unwavering trade actions to correct trade imbalances and regain the US economic nationalism.

On 2 April 2025, under the International Emergency Economic Power Act of 1977 (IEEPA), President Trump unveiled a sweeping reciprocal tariffs policy on all countries, with a few exceptions. A baseline tariff of 10% will take effect on 5 April 2025, while selected countries will face a total additional tariffs of up to 50% with effect from 9 April 2025. These tariffs are expected to bring significant shift in global trade, potentially triggering retaliatory actions from affected nations and sparking a full-blown trade war.

As Malaysia is in the list “Dirty 15” countries that the US has incurred a trade deficit of USD24.8 billion in 2024, the US administration has hit Malaysia an additional 24% tariff on all its goods exporting to the US, which the US that claimed that it is a 50% discount from the implied 47% tariff currently imposed on the US goods into Malaysia.

As the US was Malaysia’s second largest export destination (13.2% share) in 2024, the direct impact of the US tariffs and also the US’s wider trade tensions with her trading partners will have a knock-on effect on Malaysia’s external sector given the disruptive impact on supply chains, global demand, increase raw materials costs and business operational cost. The impacted industries are electrical and electronic products (excluding semiconductor), machinery and equipment, optical and scientific equipment, rubber products, furniture products, and palm oil.