KUALA LUMPUR — Malaysia is seeking more information from the US for clarify regarding tariffs on China companies that operate in Malaysia, the Investment, Trade and Industry Ministry (Miti) said today.
Minister Senator Datuk Seri Tengku Zafrul Tengku Abdul Aziz acknowledged the risks on Malaysia from the US’ move to impose 10% tariffs on Chinese imports, including on China companies that invest outside the republic.
He told the Dewan Rakyat that there are China companies that invest in Malaysia to benefit from free trade agreements (FTAs) that Malaysia has with other countries.
“(But) our current concerns are whether exports to the US will be affected as we don’t have any FTAs with the US.
“One of the tariff that have been imposed is on renewable energy, such as solar panels that are manufactured in Malaysia, Vietnam and Thailand, because there are elements of technology from China.
“As such we have to continue discussions with the US to provide information,” Zafrul told MPs during question time today.
The minister was answering a question by Datuk Dr Ku Abd Rahm Ku Ismail (Kubang Pasu-PN) who asked the government on how Malaysia is dealing with global trade uncertainties arising from tariff increases imposed by US President Donald Trump on certain countries.
Trump has not given China a reprieve from the 10% tariffs on Chinese imports to the US the same way he gave a 30-day postponement to 25% tariffs imposed on Mexico and Canada recently.
Zafrul said the industries of concern to Malaysia are those that deal with chips and artificial intelligence (AI).
Malaysia must ensure that it meets standards and enforcement governing these sectors to satisfy US criteria on imports of those products, “in case the US decides to raise tariffs or impose export restrictions”, Zafrul added.
He also said that Malaysia has been monitoring the issue of US tariffs on Chinese companies operating outside China even during Trump’s first administration.
However, Zafrul said he did not expert Malaysia’s semiconductor exports to be badly affected by the hike in US tariffs which currently affect other countries.
“The recent hike in tariffs involves several countries, not Malaysia. As such, Miti believes the negative impact on semiconductor exports will be minimal,” he told the Dewan Rakyat.
He said US investments remains strong for now, totalling RM5.1 billion for the first nine months of 2024.
*Malaysia had also signed the MoU on Semiconductor Supply Chain Resilience with the US in 2022 and this proves the commitment of both counties on this matter.
“As such, we are confident the investors from US will remain in Malaysia to ensure they maintain a strong relationship with their global partners,” Zafrul added.
In 2024, the US, which is Malaysia’s third largest trading partner accounting for almost RM325 billion or 11% of total trade, was also the third biggest market for Malaysia’s electrical and electronic (E&E) exports.
The US is also among the largest foreign investors with around 600 firms, Zafrul noted.
“Putrjaaya is taking pro-active steps to strengthen our relationship with the US on trade issues to avoid any increase in trade tariffs as what has happened to China, Canada and Mexico.
“In accordance to Malaysia’s policy of being a trading nation and its non-aligned position in trade wars with the US, the government will continue to ensure that it is preferred trading partner for all countries,” Zafrul said. – February 6, 2025