Trump’s tariffs could
backfire on US firms in
Malaysia, says ex-MP
Charles Santiago says the tariffs would lead to higher production costs and product prices, which could force US firms to relocate operations.
Charles Santiago, who previously headed an economic and research centre, said that US semiconductor companies have a huge presence in Malaysia with over 200 US firms based in Penang.
Tariffs would lead to an increase in their production costs and in turn increase the cost of products and could force these US companies to move production to different parts of the world.
“Trump’s tariffs will end up hurting both American companies and Malaysia as these tariffs would have a knock on impact on other products which could result in increased inflation and ultimately job losses,” he told FMT.
US president Donald Trump has threatened to impose 100% tariffs on exports from members of the BRICS grouping of nations, which includes Malaysia, if they go ahead with replacing the US dollar as the international reserve currency.
Yeah Kim Leng of Sunway University said Malaysia must tread carefully as the country has a sizable export market in the US, especially in electronics and semiconductors. “If Malaysia is included in the tariff list, we need to craft appropriate policies to cushion the impact,” said Yeah, who is also an adviser to the government.
Yeah said one such policy that could cushion the impact of a tariff is to find strategies to pre-empt and to counter any unilateral tariff actions taken by the US.
Should that fail, a tariff response policy would be needed, working closely with industry to develop strategies to alleviate any negative impact on the Malaysian economy.
Yeah said prices could double overnight in industries such as medical gloves, semiconductors, and electrical components.
“Companies may choose to move their supply chains back to the US or shift to other countries, leading to a sharp decline in exports for Malaysia. This would have a knock-on effect on the economy,” he said.
However, Razman Latiff of Putra Business School said Malaysia should not be overly concerned, as the BRICS group had never explicitly sought to replace the US dollar with its own currency.
However, he agreed that Malaysia must closely monitor Trump’s tariff policies to avoid unintended consequences. “If there are implications, we should negotiate with the US to ensure there are no implications to the Malaysian economy.”
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