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US to Impose 25% Tariff on Malaysian Exports from Aug 1 – How Will It Affect Us?

Career AdviceJuly 10, 2025 10:00

US to Impose 25% Tariff on Malaysian Exports from Aug 1 – How Will It Affect Us?

On July 7, 2025, the United States announced it will impose a 25% “reciprocal tariff” on a wide range of Malaysian exports chiefly semiconductors, electronic components, machinery, and palm oil products starting August 1, 2025.

This decision, part of a broader move targeting 14 countries, aims to prevent re‑export of Chinese goods through Southeast Asia. Malaysia's current tariff rate is 10%; it will increase to 25% on affected categories, not in addition to existing taxes .

Why Malaysia Is Affected

Malaysia is a major exporter in global electronics and semiconductor supply chains, making it directly vulnerable to U.S. trade measures. The U.S. government hasn’t identified specific companies, but sectors like E&E, machinery, scientific instruments, and rubber products are reportedly targeted.

Reciprocal Tariff Exceptions

Not all imports will be affected. The Trump Administration issued carve-outs for certain goods:

In-transit goods: Cargo already loaded onto vessels before the tariff's effective date will be exempt.
Section 232 products: Steel, aluminum, automobiles, and parts already under U.S. Section 232 tariffs are excluded.
Annex II items: Includes pharmaceuticals, semiconductors, lumber, critical minerals, and electronics (e.g., smartphones, computers) .

As a result, U.S.-bound Malaysian shipments falling within these categories won’t face the new 25% tariff, potentially shielding key electronics export segments.

Impact on Malaysian Economy

1. Electronics & Semiconductor Exports

Malaysia exported ~RM119.9 billion in these goods to the U.S. in 2024, over 60% of total exports.
Local manufacturers are warning of eroding competitiveness, citing slim margins and limited capacity to absorb the 25% tariff.

2. Manufacturing and SMEs

The broader manufacturing sector, including rubber, wood, furniture, and components, may suffer due to rising costs and reduced demand
ACCCIM has urged government support, suggesting temporary SST reductions to ease the burden.

Government Strategy & Diplomatic Response

No retaliation: Malaysia has ruled out tariffs of its own but will continue negotiations.
Active engagement: Trade Minister Tengku Zafrul Aziz is in dialogue with the USTR, with an extended deadline till August 1.
ASEAN-level coordination: PM Anwar Ibrahim stressed the need for regional unity and diversification of trade ties.

What Malaysian Businesses Can Do

Audit exposed exports: Identify which products fall under the 25% tariff and explore product reformulation or reclassification.
Diversify export markets: Boost presence in EU, Middle East, ASEAN, India to reduce dependency on US demand.
Negotiate supply chain shifts: Work with buyers to share the tariff burden or move manufacturing to non‑tariffed countries.
Lobby for relief: Engage with the government or trade bodies to request relief measures like SST reductions.
Financial preparedness: Consider working capital options, FX hedging, or restructuring pricing strategies.

Potential Impacts on Local Employment

Trade tariffs can materially affect employment in Malaysia's major export sectors. The United States remains a primary market for Malaysia’s top export industries, including:

Electronics and Semiconductors
Machinery
Wood Products (such as furniture)
Rubber Goods

According to official trade data, a marked decline in orders from U.S. buyers may compel these exporters to scale back production, potentially leading to hiring freezes or workforce reductions as companies look to curb operational costs.

Moreover, a slowdown in these pivotal sectors can propagate through the wider economy. Reduced activity in key industries can adversely affect logistics providers and local service businesses that support factory operations and employees.

For example, lower output at a Penang electronics plant could diminish earnings for a Kedah lorry driver, or for a café proprietor in Kulim, underscoring how export shocks reverberate across community livelihoods.

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Reference:
https://www.reuters.com/world/eus-von-der-leyen-had-good-exchange-with-trump-over-phone-commission-says-2025-07-07
https://ringgitplus.com/en/blog/personal-finance-news/understanding-the-new-25-us-tariff-on-malaysian-goods.html
https://www.thompsoncoburn.com/insights/trade-compliance-resources
https://kpmg.com/my/en/home/insights/2025/04/reciprocal-tariffs-announced-by-us-on-2-april-2025.html
https://theedgemalaysia.com/node/761863
https://www.theguardian.com/business/live/2025/jul/08/stock-markets-trump-tariff-letters-august-deadline-obr-uk-public-finances-marks-spencer-cyber-hack-business-live-news-updates
https://www.malaymail.com/news/malaysia/2025/07/09/acccim-urges-temporary-sst-reduction-while-malaysia-faces-us-tariff-impact/183315

US to Impose 25% Tariff on Malaysian Exports from Aug 1 – How Will It Affect Us?

US to Impose 25% Tariff on Malaysian Exports from Aug 1 – How Will It Affect Us?

On July 7, 2025, the United States announced it will impose a 25% “reciprocal tariff” on a wide range of Malaysian exports chiefly semiconductors, electronic components, machinery, and palm oil products starting August 1, 2025.

This decision, part of a broader move targeting 14 countries, aims to prevent re‑export of Chinese goods through Southeast Asia. Malaysia's current tariff rate is 10%; it will increase to 25% on affected categories, not in addition to existing taxes .

Why Malaysia Is Affected

Malaysia is a major exporter in global electronics and semiconductor supply chains, making it directly vulnerable to U.S. trade measures. The U.S. government hasn’t identified specific companies, but sectors like E&E, machinery, scientific instruments, and rubber products are reportedly targeted.

Reciprocal Tariff Exceptions

Not all imports will be affected. The Trump Administration issued carve-outs for certain goods:

In-transit goods: Cargo already loaded onto vessels before the tariff's effective date will be exempt.

Section 232 products: Steel, aluminum, automobiles, and parts already under U.S. Section 232 tariffs are excluded.

Annex II items: Includes pharmaceuticals, semiconductors, lumber, critical minerals, and electronics (e.g., smartphones, computers) .

As a result, U.S.-bound Malaysian shipments falling within these categories won’t face the new 25% tariff, potentially shielding key electronics export segments.

Impact on Malaysian Economy

1. Electronics & Semiconductor Exports

Malaysia exported ~RM119.9 billion in these goods to the U.S. in 2024, over 60% of total exports.

Local manufacturers are warning of eroding competitiveness, citing slim margins and limited capacity to absorb the 25% tariff.

2. Manufacturing and SMEs

The broader manufacturing sector, including rubber, wood, furniture, and components, may suffer due to rising costs and reduced demand

ACCCIM has urged government support, suggesting temporary SST reductions to ease the burden.

Government Strategy & Diplomatic Response

No retaliation: Malaysia has ruled out tariffs of its own but will continue negotiations.

Active engagement: Trade Minister Tengku Zafrul Aziz is in dialogue with the USTR, with an extended deadline till August 1.

ASEAN-level coordination: PM Anwar Ibrahim stressed the need for regional unity and diversification of trade ties.

What Malaysian Businesses Can Do

Audit exposed exports: Identify which products fall under the 25% tariff and explore product reformulation or reclassification.

Diversify export markets: Boost presence in EU, Middle East, ASEAN, India to reduce dependency on US demand.

Negotiate supply chain shifts: Work with buyers to share the tariff burden or move manufacturing to non‑tariffed countries.

Lobby for relief: Engage with the government or trade bodies to request relief measures like SST reductions.

Financial preparedness: Consider working capital options, FX hedging, or restructuring pricing strategies.

Potential Impacts on Local Employment

Trade tariffs can materially affect employment in Malaysia's major export sectors. The United States remains a primary market for Malaysia’s top export industries, including:

Electronics and Semiconductors

Machinery

Wood Products (such as furniture)

Rubber Goods

US to Impose 25% Tariff on Malaysian Exports from Aug 1 – How Will It Affect Us?

US to Impose 25% Tariff on Malaysian Exports from Aug 1 – How Will It Affect Us?

On July 7, 2025, the United States announced it will impose a 25% “reciprocal tariff” on a wide range of Malaysian exports chiefly semiconductors, electronic components, machinery, and palm oil products starting August 1, 2025.

This decision, part of a broader move targeting 14 countries, aims to prevent re‑export of Chinese goods through Southeast Asia. Malaysia's current tariff rate is 10%; it will increase to 25% on affected categories, not in addition to existing taxes .

Why Malaysia Is Affected

Malaysia is a major exporter in global electronics and semiconductor supply chains, making it directly vulnerable to U.S. trade measures. The U.S. government hasn’t identified specific companies, but sectors like E&E, machinery, scientific instruments, and rubber products are reportedly targeted.

Reciprocal Tariff Exceptions

Not all imports will be affected. The Trump Administration issued carve-outs for certain goods:

In-transit goods: Cargo already loaded onto vessels before the tariff's effective date will be exempt.

Section 232 products: Steel, aluminum, automobiles, and parts already under U.S. Section 232 tariffs are excluded.

Annex II items: Includes pharmaceuticals, semiconductors, lumber, critical minerals, and electronics (e.g., smartphones, computers) .

As a result, U.S.-bound Malaysian shipments falling within these categories won’t face the new 25% tariff, potentially shielding key electronics export segments.

Impact on Malaysian Economy

1. Electronics & Semiconductor Exports

Malaysia exported ~RM119.9 billion in these goods to the U.S. in 2024, over 60% of total exports.

Local manufacturers are warning of eroding competitiveness, citing slim margins and limited capacity to absorb the 25% tariff.

2. Manufacturing and SMEs

The broader manufacturing sector, including rubber, wood, furniture, and components, may suffer due to rising costs and reduced demand

ACCCIM has urged government support, suggesting temporary SST reductions to ease the burden.

Government Strategy & Diplomatic Response

No retaliation: Malaysia has ruled out tariffs of its own but will continue negotiations.

Active engagement: Trade Minister Tengku Zafrul Aziz is in dialogue with the USTR, with an extended deadline till August 1.

ASEAN-level coordination: PM Anwar Ibrahim stressed the need for regional unity and diversification of trade ties.

What Malaysian Businesses Can Do

Audit exposed exports: Identify which products fall under the 25% tariff and explore product reformulation or reclassification.

Diversify export markets: Boost presence in EU, Middle East, ASEAN, India to reduce dependency on US demand.

Negotiate supply chain shifts: Work with buyers to share the tariff burden or move manufacturing to non‑tariffed countries.

Lobby for relief: Engage with the government or trade bodies to request relief measures like SST reductions.

Financial preparedness: Consider working capital options, FX hedging, or restructuring pricing strategies.

Potential Impacts on Local Employment

Trade tariffs can materially affect employment in Malaysia's major export sectors. The United States remains a primary market for Malaysia’s top export industries, including:

Electronics and Semiconductors

Machinery

Wood Products (such as furniture)

Rubber Goods

Related Post

US to Impose 25% Tariff on Malaysian Exports from Aug 1 – How Will It Affect Us?

US to Impose 25% Tariff on Malaysian Exports from Aug 1 – How Will It Affect Us?

Malaysia exported ~RM119.9 billion in these goods to the U.S. in 2024, over 60% of total exports.