KUALA LUMPUR, April 4 — Malaysia will face a significant economic challenge with US President Donald Trump’s “Liberation Day” tariffs imposing a 24 per cent rate on its exports, a significant increase that threatens to disrupt trade and growth in the region, according to Fitch Ratings.
The move is also expected to raise the overall US effective tariff rates (ETR) to about 25 per cent, the highest in over 115 years, leaving Malaysia with limited room to manouvre.
According to Fitch Ratings, “the broad-based nature of the tariff hikes constrains the scope for trade diversion, underlining the likelihood that the trade war will have adverse effects all round.”
For Malaysia, the rate is on the higher end, comparable to those imposed on other countries in Asia, such as Japan (24 per cent) and Taiwan (32 per cent).
Fitch Ratings also warned the tariff hikes will directly impact Malaysian exports to the US, raising the cost of goods and potentially squeezing local business profit margins.
While other nations such as China face even steeper tariffs (64 per cent), Malaysia’s position in the region makes it particularly vulnerable, Fitch Ratings suggested.
Malaysia’s growth prospects, already under pressure, will be further hampered as global trade faces significant disruptions due to the tariff hikes.
The long-term effects on Malaysia’s credit rating remain uncertain but could worsen depending on how the country adapts to these new trade barriers.
