Can We Counter 25% US Tariff Impact?

The Federation of Malaysian Manufacturing (FMM) has expressed deep concern over the latest announcement under the US reciprocal tariffs which will see a 25% blanket tariff imposed on all Malaysian products entering the US market effective Aug 1. 

This announcement comes as a surprise given the intensive and on-going negotiations between the Malaysian government and the US coordinated by the Investment, Trade and Industry Ministry (MITI) under the National Geoeconomic Command Centre (NGCC) framework. Why is the Minister in Washington jogging when we could have done that in Putrajaya?

 

 

The manufacturing sector is already impacted from the earlier 10% US tariff and escalating domestic cost pressures, including the expanded Sales and Service Tax (SST) and electricity base tariff revisions. The latest escalation risks further de-stabilising an already fragile industrial landscape, severely impacting export competitiveness and placing additional strain on manufacturers. Feedback from manufacturers as gathered by FMM during the initial 10% US reciprocal tariff implementation already pointed to serious concerns over the sustainability of export operations with many warning that further tariff hikes would result in significant declines in shipments and severe erosion of profit margins. 

Most Malaysian exports including rubber products, textiles, furniture and industrial components will be adversely affected, thus placing added strain on companies already grappling with rising input costs and market uncertainty. Although Malaysia’s initial proposed 24% tariff in April 2025 was lower than peers such as Cambodia, Vietnam and Thailand, the new blanket 25% rate places Malaysia in a more punitive position, especially as Vietnam has since secured a bilateral arrangement which reduces its rate to 20%. 

Compounding the issue, other ASEAN members such as Singapore, Brunei and the Philippines were not named in the latest tariff wave. These disparities risk diverting US sourcing to lower tariff alternatives and eroding Malaysia’s market share. 

Our compliance record, investment linkages and value-added contribution should form the basis for seeking targeted relief or differentiated treatment to prevent long term structural damage to Malaysia’s export position. This was expressed by FMM. But are we doing anything seriously about this or just jogging along? 

Reference:

Where have we erred? FMM urges swift diplomatic interventions to counter 25% US tariff impact, Focus Malaysia, 8 July 2025