Saying Trump’s tariff war could be like Covid, Guan Eng urges Malaysia to brace for collateral damage
A sign that reads “Buy Canadian Instead” is displayed at a store in Vancouver, British Columbia, Canada, February 2, 2025. — Reuters pic
Monday, 03 Feb 2025 2:42 PM MYT
KUALA LUMPUR, Feb 3 — A global trade war sparked by newly inaugurated US President Donald Trump’s tariffs could have the same devastating effects on inflation and economic growth as the Covid-19 pandemic, warned DAP chairman Lim Guan Eng.
The former finance minister said that while Malaysia is not directly targeted by the new tariffs, it is at risk due to its deep trade ties with China, Canada, and Mexico, all of which face steep US import duties.
“A global trade war with retaliatory tariffs may have the same adverse impact on escalating inflation and arresting economic growth as the Covid-19 pandemic,” Lim said.
“Trump’s protectionist tariff policies pose the greatest threat to containing inflation and generating sustainable economic growth for Malaysia.”
Lim said the federal government should consider raising SME tax thresholds, exempting small businesses from e-invoicing, and delaying the luxury tax to reduce costs as pre-emptive steps.
He further proposed exempting private company shares from the dividend tax and employers from contributing to the Employees Provident Fund accounts of foreign workers.
“Defer the withdrawal of RON95 fuel subsidies and not float RON95 to market price, which will only cause inflation and rising transport costs,” he added.
China, Malaysia’s largest trading partner for 15 years, supplies critical materials and components for the country’s electronics sector, and any disruption could cause shortages and drive up costs, Lim said.
On Saturday, US President Donald Trump triggered an unprovoked trade war by slapping tariffs on Canada, China, and Mexico, prompting retaliatory measures from the three countries.
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