Malaysia must be ready for possibility of additional tariffs on semiconductors - Tengku Zafrul

KUALA LUMPUR: Malaysia must be ready and prepared for the possibility of additional tariffs being imposed on the semiconductor industry by the United States (US), said Minister of Investment, Trade and Industry Tengku Datuk Seri Zafrul Abdul Aziz.

AI Brief

Though currently exempt, Malaysian semiconductor exports are under US national security review and may face future tariffs.
Malaysia will invest US$150 billion in key sectors like semiconductors and aerospace under a new trade agreement.
The government will help local businesses adapt to geopolitical challenges and ensure long-term benefits from the deal.

"Although semiconductor products are currently exempt from (US) retaliatory tariffs, they are under investigation pursuant to Section 232 of the Trade Expansion Act of 1962, which allows the US to impose additional tariffs on national security grounds," he told Dewan Rakyat during a ministerial briefing on trade negotiations with the US.

Tengku Zafrul said that to help reduce the bilateral trade deficit, the US is encouraging Malaysia to increase commercial considerations such as procurement from, and investment in, as part of the Agreement on Reciprocal Trade's (ART) "Section 6 - Commercial Consideration" that will be signed with the US soon.

Among the commitments made between Malaysia and the United States is the procurement of goods by multinational companies in the semiconductor, aerospace, and data centre sectors valued at US$150 billion (US$1 = RM4.24) over five years.

Meanwhile, Tengku Zafrul said the Ministry of Investment, Trade and Industry (MITI) will monitor the implementation of these commitments to ensure they are correctly executed and bring long-term benefits to the country.

"For local industries, especially small and medium enterprises (SMEs), the MADANI government will continue to support them in facing these geopolitical challenges, including helping them adapt their business processes and exports to the US in response to the implementation of retaliatory tariffs.

"MITI and its agencies will carry out outreach programmes for the relevant sectors soon," he added.

Tengku Zafrul emphasised that with the finalisation of the agreement with the US, the government is committed to ensuring Malaysia can continue to strengthen bilateral trade and investment, while maintaining strategic cooperation with other trading partners without sacrificing the nation's sovereignty and economic stability.

-- BERNAMA