THE Federation of Malaysian Manufacturing (FMM) has expressed deep concern over the latest announcement under the US reciprocal tariffs which will see a 25% blanket tariff imposed on all Malaysian products entering the US market effective Aug 1.
This announcement comes as a surprise given the intensive and on-going negotiations between the Malaysian government and the US coordinated by the Investment, Trade and Industry Ministry (MITI) under the National Geoeconomic Command Centre (NGCC) framework.
“The manufacturing sector is already reeling from the earlier 10% US tariff and escalating domestic cost pressures, including the expanded Sales and Service Tax (SST) and electricity base tariff revisions which will most impact the high voltage customers,” lamented FMM president Tan Sri Soh Thian Lai.
“This latest escalation risks further de-stabilising an already fragile industrial landscape, severely impacting export competitiveness and placing additional strain on manufacturers.”
Feedback from manufacturers during the initial 10% US reciprocal tariff implementation already pointed to serious concerns over the sustainability of export operations with many warning that further tariff hikes would result in significant declines in shipments and severe erosion of profit margins.
“The newly announced 25% blanket tariff, if implemented as scheduled on Aug 1 is expected to intensify these pressures across the board, particularly for companies operating on thin margins or bound by long-term supply contracts,” warned Soh.
“While some critical products such as semiconductors are exempted, the broader ecosystem that supports the semiconductor industry, including suppliers of parts, machinery and supporting services, remains exposed to significant disruption.”
On this note, the vast majority of Malaysian exports including rubber products, textiles, furniture and industrial components will be adversely affected, thus placing added strain on companies already grappling with rising input costs and market uncertainty.
“FMM is particularly concerned by Malaysia’s relative disadvantage in the evolving tariff landscape,” asserted Soh.
“Although Malaysia’s initial proposed 24% tariff in April 2025 was lower than peers such as Cambodia, Vietnam and Thailand, the new blanket 25% rate places Malaysia in a more punitive position, especially as Vietnam has since secured a bilateral arrangement which reduces its rate to 20%.
Editor’s Note: MITI will be holding a media conference to address the latest reciprocal tariff rate of 25% on Malaysian exports to the US at 6pm at Menara MITI tomorrow (July 9) following the Cabinet meeting, according to Minister Tengku Datuk Seri Zafrul Abdul Aziz.
Tengku Zafrul was speaking to the Malaysian media covering the country’s trade mission to three countries – Italy, France and Brazil – led by Prime Minister Datuk Seri Anwar Ibrahim.
Compounding the issue, other ASEAN members such as Singapore, Brunei and the Philippines were not named in the latest tariff wave.
These disparities risk diverting US sourcing to lower tariff alternatives and eroding Malaysia’s market share.
“Malaysia’s integral role in US and global high technology supply chains, particularly in electrical and electronics (E&E), medical devices and precision engineering, must be strongly asserted in negotiations,” stressed Soh.
“Our compliance record, investment linkages and value-added contribution should form the basis for seeking targeted relief or differentiated treatment to prevent long term structural damage to Malaysia’s export position.” – July 8, 2025
Main image credit: Tengku Zafrul/Facebook
