[OPINION] When the Eagle sneezes, Malaysia must not catch a cold

For many, this may sound like a distant policy scuffle across the Pacific. But let me be clear: this is not some foreign fire in a faraway forest. This is a storm cloud drifting toward our own skies.

When the eagle sneezes, the world does not merely listen—it braces. But we Malaysians must not merely brace; we must act, think, and adapt.

On paper, these tariffs are meant to “match” what America perceives as unfair treatment of its goods abroad. In reality, they are a political tool—used to penalize countries that the U.S. deems too protectionist, too independent, or simply too successful at exporting.

According to US officials, Malaysia is in the crosshairs due to a long-standing list of complaints: our halal certification requirements, preferential treatment for local firms, automotive import restrictions, and digital regulations that some claim limit open access. Most of these are sovereign policies rooted in our unique culture and economic context. Yet they are now being weaponized in the name of “fair trade.”

Adding to the complexity, reports indicate that the U.S. administration claims Malaysia imposes a 47% tariff on American goods, justifying the 24% reciprocal tariff. This figure is perplexing and warrants scrutiny. Malaysia's average applied tariff rate is considerably lower, and such a high percentage does not align with our nation's trade policies or strategic positioning. How did the U.S. arrive at this 47% figure? Is this an overestimation, a miscalculation, or perhaps a conflation of various non-tariff measures? The lack of transparency in this calculation raises concerns about the fairness and accuracy of the imposed tariffs.

Nobel laureate economist Paul Krugman has critiqued the methodology behind these tariffs, highlighting that the calculations are "completely crazy." For instance, the European Union, which has an average tariff of just 3% on U.S. goods, is purportedly assigned a 20% tariff under this new policy. This discrepancy underscores the arbitrary and potentially punitive nature of the tariffs.

Let’s be honest: this isn’t really about fairness. It’s about power. And we must recognize it for what it is—a loud thump from a superpower trying to reclaim its dominance in a world that has moved on.

Let’s not mince words—these tariffs will hurt.

Malaysia is not just a trading nation; we are a manufacturing powerhouse, a middle-income country striving to climb the value chain. Over 40% of our exports are electronics and electrical components—semiconductors, sensors, circuit boards—many of which are destined for the U.S.. Yes THESE not YET part of this latest tariff regime, but it does not mean it won't be when another set of calculations - or miscalculations reaches the oval office.

When these and other products are taxed an extra 24%, American buyers may look elsewhere. That means fewer orders, smaller contracts, and—most painfully—fewer jobs in Penang, Johor, Selangor, and even Perak. In Ipoh, several multinational companies contribute significantly to our local economy and are integral to the global supply chain. Notable examples include several multinational corporations operating out of Ipoh, representing countries such as the United States, the United Kingdom, Switzerland, Japan, and Malaysia, are bracing for significant headwinds due to the newly announced 24% U.S. tariff. These firms span critical sectors including semiconductors, industrial machinery, power transmission, specialty soldering materials, and rubber-based manufacturing.

While some—such as those in the semiconductor industry—are not yet directly affected by the current tariff scope, the intricate interdependence of global supply chains means even indirect disruptions could cascade through production schedules and employment levels in Ipoh.

For companies manufacturing components like industrial chains, latex gloves, and precision machinery, the impact is more immediate. With a sudden increase in cost for American buyers, competitiveness in the U.S. market may plummet, leading to potential order cancellations, shrinking margins, and operational recalibration.

Collectively, these challenges could translate into economic strain for the local ecosystem, particularly for the skilled labour and ancillary industries that depend on these export-oriented manufacturers.

When global demand drops, the first to bleed are the factory workers, the logistics drivers, the port laborers—not the billionaires.

We must not panic, but neither must we pretend all is well. This is not the first time the world has turned cold. But it is perhaps the first time in decades that we face being squeezed between two giants—the U.S. and China—in a contest that is not of our choosing.

Here’s what we can do: 1. Fight smart, not loud. Reignite and escalate serious diplomatic engagement with the United States. Let’s resolve outstanding issues on halal certification and auto imports with transparency and technical expertise, not political chest-thumping. 2. Diversify, diversify, diversify. We must broaden our markets—into the Middle East, India, Africa, and fellow ASEAN members. Let no Malaysian product be too dependent on any one nation’s appetite and/or kindness. 3. Build our economic resilience. Invest in skills. Modernize - and urgently- our Technical and Vocational Education and Training (TVET). Push for green industries. Expand our digital economy in a way that respects sovereignty but invites collaboration. 4. Send a message: Malaysia is open, but not for exploitation. We welcome trade. But trade must be fair to us too. We must never bow to bullying masked as “reciprocity.” We are always open, willing and eager in cross checking calculations on tariffs and trade figures.

The imposition of these tariffs by the United States undeniably presents a formidable challenge to Malaysia's economic landscape. However, within this adversity lies a pivotal opportunity for introspection and strategic realignment.

By proactively addressing these challenges through diplomatic engagement, market diversification, and bolstering economic resilience, Malaysia can not only mitigate the immediate impacts but also lay the groundwork for a more robust and self-reliant economic future.

I welcome MITI's level headed and calm stance of continued engagement thus far. Perhaps, now we have something worth engaging the US, and worth 'fighting for' to lay on the table with President Trump.

When the winds of change blow, some build walls; others build windmills. Let Malaysia be the latter.

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