Kuala Lumpur, 8 April 2025: The Institute for Democracy and Economic Affairs (IDEAS) is deeply concerned by the United States government’s recent imposition of wide-ranging tariffs on Malaysian exports under the “Liberation Day” initiative. This disruptive and economically incoherent policy represents yet another deviation from rules-based multilateralism, posing broader risks to global economic integration, and the principles of free and open trade.

“Broad-based tariffs are the Trump administration’s latest damaging and misguided deviation from sound economic policymaking. They add to the dismantling of USAID and the US withdrawal from international governance in generating heightened uncertainty, which threatens the livelihoods of Malaysians and people across the globe,” said Dr Stewart Nixon, IDEAS Deputy Director of Research.

The punitive Trump administration tariffs have no relationship with Malaysia’s (or any other countries) trade policy settings. Malaysia’s trade-weighted average tariff on imports from the United States is just 1.5%, with Malaysia’s goods trade surplus reflecting comparative advantages and demand preferences more so than trade restrictions. The tariffs will add to trade costs, impeding the exchange of goods and services that deliver large benefits for both Malaysia and America, including by increasing productivity, creating jobs and lowering prices. 

IDEAS welcomes the Malaysian government’s swift, proportionate response — including the establishment of the National Geoeconomic Command Centre (NGCC) and MITI’s tariff taskforce. Prime Minister Dato’ Seri Anwar Ibrahim’s focus on leading a collective ASEAN-level strategy during Malaysia’s 2025 ASEAN Chairmanship is timely and commendable. This response must be followed up with regular updates that assure industry players and the public that their interests are protected and for markets to remain strong and stable.

IDEAS strongly urges the government to avoid retaliatory measures or mirroring US tariff hikes, which would only compound the economic burden on Malaysians. Instead, Malaysia should continue pursuing long-term, mutually beneficial partnerships with economies committed to free and fair trade. Emphasis should also be placed on enhancing institutional transparency and accelerating structural reforms to position Malaysia as a stable and attractive destination for sustained and resilient trade and investment.

“Policymakers should be mindful that economic shocks hurt vulnerable people and small businesses the most. Malaysia must be increasingly vigilant to reduce vulnerability while the United States appears intent on creating it,” added Dr Nixon. 

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