KUALA LUMPUR (Aug 1): The Federation of Malaysian Manufacturing (FMM) said on Friday that the six-percentage point cut in US tariffs on Malaysian exports, though seemingly modest, represents a meaningful relief for industry players, particularly those in thin-margin and price-sensitive sectors.
FMM noted that the recent announcement by the US government to revise the reciprocal tariff on Malaysian exports from 25% to 19%, is very much welcomed.
“Although the six-percentage point reduction may seem modest, it is significant for industry players, especially for sectors operating on thin margins or those competing in price-sensitive global supply chains,” said FMM president Tan Sri Soh Thian Lai in a statement on Friday.
He added that the tariff cut enhances the overall cost competitiveness of Malaysian-manufactured goods in the US market, and serves as a positive signal of improved bilateral trade relations.
FMM also pointed out that while some argue tariffs are borne primarily by importers, in reality, the cost is often shared across the supply chain.
“Therefore, a reduction in tariffs benefits not only Malaysian exporters but also US importers. It improves the overall cost equation and can stimulate demand for Malaysian goods, especially in sectors where price plays a crucial role in purchasing decisions,” Soh said.
Tariff cut likely to boost new export orders
According to FMM, export-oriented industries such as electrical and electronics (E&E), machinery and equipment (M&E), rubber-based products, and processed industrial goods are expected to benefit from the improved competitiveness and increased demand.
“While some front-loading of orders may have occurred earlier, the tariff cut is likely to encourage more exporters to consider taking on new orders, going forward,” Soh said.
Manufacturers, however, remain cautious amid volatility in global markets and ongoing supply-chain disruptions, and are expected to factor these risks into their planning.
FMM added that the move comes at a critical juncture, while expressing hope that it will pave the way for further easing of trade barriers and deeper collaboration under frameworks such as the Indo-Pacific Economic Framework (IPEF).
“The tariff adjustment reflects the commendable efforts and relentless initiatives taken by the Prime Minister (Datuk Seri Anwar Ibrahim) and Miti (Ministry of Investment, Trade and Industry) in negotiating with their US counterparts,” Soh said.