U.S. Imposes “Liberation Day Reciprocal Tariffs” of 24% on Malaysia

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3 April 2025 PENANG, MALAYSIA – In a significant move that is poised to reshape global trade, U.S President Trump announced the implementation of “Liberation Day Reciprocal Tariffs” on April 2, 2025. This policy shift has sent waves of concern across Asian economies, including Malaysia, particularly impacting Penang’s industrial sector.

Details of the Tariffs

The new tariff regime introduces a 10 percent baseline tariff on all imports from all countries, effective from April 5, 2025. In addition to this, individualized reciprocal tariffs will be imposed on countries with substantial trade deficits with the U.S., commencing on April 9, 2025. However, there will be some exemptions to the tariffs for some goods, including copper, pharmaceuticals, semiconductors, and lumber articles.

Tariff Rates for Malaysia and Key Asian Partners

Malaysia now faces a 24 percent tariff under this framework. This places Malaysia alongside other key Asian and ASEAN trading partners with the following tariff rates (in numerical order):

• Cambodia: 49%
• Laos: 48%
• Vietnam: 46%
• Myanmar: 44%
• Thailand: 36%
• China: 34%
• Taiwan: 32%
• Indonesia: 32%
• India: 26%
• South Korea: 25%
• MALAYSIA: 24%
• Japan: 24%
• Philippines: 17%
• Singapore: 10%

These tariff rates are intended to reflect the principle of reciprocity, with the U.S. aiming to align its tariffs with those imposed by these nations on American goods.

Potential Impact on Malaysia

Malaysia has a noteworthy trade relationship with the United States, exporting electronics, semiconductors, machinery, and palm oil. The new 24 percent tariff could significantly impact the competitiveness of these goods in the U.S. market. While Malaysian authorities express confidence in the nation’s economic resilience, concerns have been raised about a potential decline in Malaysia’s export value to the U.S., especially in key sectors like electronics, machinery, and palm oil.

Impact on Penang’s Industrial Sector

Penang, a major hub for Malaysia’s electronics and semiconductor industry, is particularly vulnerable. Although semiconductors are reportedly exempt from the reciprocal tariffs, the broader electronics sector and potential future tariffs on related materials or components could still face adverse effects. There are also concerns that increased costs for U.S. companies operating in Penang may lead them to reconsider their production locations.

Broader Implications for International Trade and Supply Chains

The “Liberation Day Reciprocal Tariffs” could trigger a global trade war, with other countries retaliating with their own tariffs on U.S. goods. Such a scenario could disrupt global supply chains and slow economic growth worldwide.

Conclusion and Outlook

The tariffs announced by the Trump administration represent a significant development in global trade policy, with potentially far-reaching consequences for Malaysia and its industrial sector in Penang. Businesses and policymakers in Penang are advised to consider diversifying export markets, strengthening domestic demand, and enhancing competitiveness to navigate these challenges.

Call to Action:

1. View details of the reciprocal tariffs in the White House Factsheet.
2. Contact Ng Teng Huat (TH) at tenghuat@interealtor.com for support in industrial properties in Penang.