KUALA LUMPUR (April 3): Effective April 9, Malaysia will face a 24% reciprocal tariff from the US as part of a broad trade policy targeting countries with which it has large trade deficits.

The higher tariff however does not cover all goods headed for the US. Semiconductors are among goods that have been exempted from the 24% tariff.

Malaysia runs a trade surplus with the US, exporting mostly electronics, palm oil, and machinery to the world’s largest economy. In November last year, Malaysia was removed from US’ monitoring list for currency manipulation of its major trading partners.

The US' reciprocal tariff policy imposes individualised reciprocal higher tariff on the countries with which the US has the largest trade deficits. All other countries will be subject to a 10% tariff baseline. The list of goods exempted from the higher tariffs are either because they are already tariffed or are soon to be tariffed.

The US has imposed individualised tariff rates of up to 50% on major trading partners, with China facing a 34% import duty. However, Canada and Mexico are exempt from these reciprocal tariffs due to existing trade agreements.

President Donald Trump complained that the targeted countries’ tariff and non-tariff barriers, including currency practices and value-added taxes, suppress domestic consumption while boosting exports to the US.

“Despite a commitment to the principle of reciprocity, the trading relationship between the United States and its trading partners has become highly unbalanced, particularly in recent years,” according to the executive order signed by Trump posted to the White House’s website.

A baseline 10% will apply to all goods entering the US effective April 5, while the higher duties will start on April 9. 

The Ministry of Investment, Trade and Industry said Malaysia will negotiate with the US and not retaliate with more tariffs.

Some countries affected are already mulling retaliation or seeking to negotiate with the US. South Korea is planning emergency support measures for affected businesses, including automobiles, Reuters reported.

Malaysia’s neighbours were also hit, with the US imposing a steep tariff of 46% on Vietnam and 49% on Cambodia. Goods from Thailand will be charged 37% and imports from Indonesia 32%. The US will also levy 18% tariffs on imports from the Philippines.

Importers of goods from Singapore, which was not included in the list of countries being charged with higher duties, will pay the baseline 10% tariff. 

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