Malaysia optimistic of deal to lower US tariffs before deadline
Malaysia is optimistic it can reach a deal with the US to lower tariffs ahead of the Aug. 1 deadline for trade talks after President Donald Trump threatened to impose a steeper levy on the Southeast Asian country, according to Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz.
Talks have been challenging though discussions have been done "in a very respectful manner,' Zafrul said in an interview with Bloomberg TV's Haslinda Amin.
Trump said on Monday that Malaysia could see a 25% levy - "separate from sectoral tariffs' - unless it reaches an agreement with his administration before the deadline. The nation was initially hit with a 24% rate in April before the US announced a 90-day pause, which moved the level to 10% on goods to facilitate talks.
Key issues still being negotiated included the agriculture sector and digital economy, Zafrul said. The security of chips being exported to Malaysia was also a topic they have been discussing, and the government is "looking at ways to have stronger enforcement, stronger laws,' he said.
At the same time, the government has to be realistic in its targets, he said, noting that the tariff floor will be 10%. Zafrul added he was hoping the US would continue to extend zero levies on some of Malaysia's key exports, especially semiconductors. Trump has been weighing further tariffs on select industries, including chips and pharmaceuticals.
The trade minister said he would have a video call with US Trade Representative Jamieson Greer on Thursday to continue negotiations. Meanwhile, Prime Minister Anwar Ibrahim is also scheduled to meet US Secretary of State Marco Rubio on Thursday to appeal for a lower levy.
Zafrul had previously said Malaysia aimed to reduce US tariffs to below 10% for sectors critical to both economies. The Trump administration meanwhile wanted the country to address trade imbalances, non-tariff barriers and safeguard US technology from being channeled to other parties.
Zafrul on Thursday ruled out the possibility that Malaysia was going into a recession, despite the expected hit on the economy from the tariffs. The central bank on Wednesday said that it would issue a revised growth forecast in the fourth week of July, after initially projecting 4.5% to 5.5% expansion this year.
The US ran a goods trade deficit with Malaysia of $24.8 billion last year, according to data from the Office of the US Trade Representative. The US was also the biggest foreign investor in Malaysia last year. - Bloomberg
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