Malaysia’s semiconductor exports still exempted from reciprocal tariffs - MITI

KUALA LUMPUR: The Ministry of Investment, Trade and Industry (MITI) reiterated that Malaysia's semiconductor exports to the United States (US) are currently still exempted from reciprocal tariffs.

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The US is investigating semiconductor imports under national security laws, possibly leading to high tariffs.
Malaysia is engaging with US officials to protect its exporters, stressing that exemptions depend on company investments in the US.
If imposed, tariffs could make Malaysian products less competitive, though 65% of chip exports to the US come from American firms in Malaysia.

However, the ministry said that this is subject to the US's current policy reviews and changes at any time.

MITI minister Tengku Datuk Seri Zafrul Abdul Aziz said the US is currently conducting an investigation under Section 232 of its Trade Expansion Act of 1962 to determine whether imports of semiconductors, semiconductor manufacturing equipment and related derivative products pose a threat to its national security.

"The investigation was supposed to be completed by the end of December, but (has been) expedited, and the results from this investigation will be used for further action, including the possible measure of high tariffs as announced by US President Donald Trump this morning," he said during the Minister's Question Time session in the Dewan Rakyat today.

He was replying to a supplementary question from Lim Guan Eng (Bagan-PH) about the impact of the latest reports that the US would impose a tariff of around 100 per cent on imported semiconductors from countries that do not produce them in the US or do not plan to do so.

Tengku Zafrul said Malaysia is currently taking several mitigation measures, including contacting directly with the US Trade Representative and the Department of Commerce to obtain official clarification and to advocate for the interests of Malaysian exporters.

He said that if tariffs are imposed, Malaysia will risk losing a key market in the US, as locally produced products might become less competitive.

However, he said, as of now, the US government has not finalised the detailed mechanism for implementing the tariffs.

"Based on current information, the exemption is not country-based but on companies that invest directly in the US, regardless of the company's location in another country.

"Therefore, the impact is highly dependent on the investments and operations of international companies located in Malaysia," he added.

Tengku Zafrul also stated that 65 per cent of Malaysia's semiconductor exports to the US are from American companies operating in Malaysia.

-- BERNAMA