How To Address Us Tariff Plan In 90 Days

---

 
From Mazli Noor
Washington’s unprecedented announcement of sweeping tariffs against every global trading partner has put the world on notice, with Malaysia’s position neither clearer nor overtly favourable relative to any other country.
With only a 90-day breather before its proposed implementation, the Malaysian government must act decisively to mitigate its potential risks and protect its largely export-driven economy.
These must start with defining its key strategic priorities.
Strategic engagement with Washington
It has been announced that Malaysia will send a high-level negotiation team to engage directly with US trade representatives later this month.
The team’s priorities will presumably include securing exemptions for Malaysia’s semiconductor and electronic components; identifying goods and sectors that Washington plans to examine next with an eye to allay these concerns with concrete alternatives.
With a large number of countries looking to achieve the same within the same timeframe, Kuala Lumpur’s approach must ultimately be geared to optimising the time it has to mitigate the effects of the tariffs as they stand, while preserving market access to a whole range of goods not yet addressed by Washington.
Strengthening ties with China
Tandem efforts must also be made to rapidly secure a bespoke trade pact with China to:
Ascertain the most accessible alternatives for Malaysian exports that will be affected by the tariffs and access for Malaysian products within these alternatives.Secure continued and/or increased Chinese investments in key Malaysian manufacturing sectors.Create mechanisms for broader technology transfers across the E&E spectrum, andExplore definitive currency swap mechanisms to reduce dependence on the US dollar in the short to medium-term.Economic resilience through investment incentives
Domestically, Malaysia must immediately devise a new set of incentives targeting both foreign and domestic investments, with:
Generous tax holidays for companies establishing or expanding export-oriented manufacturing capabilities, particularly in new markets.Hyper-streamlined approval processes for these investments.New expedited economic zones with enhanced digital and manufacturing infrastructures.Industry-led grants focusing on high-value manufacturing and the digital economy, andTemporary electricity and utilities subsidies / moratoriums for affected manufacturers.Strategic investor outreach
Organise targeted missions to key investment communities within the next 30 days, including:
High-level delegations to financial centres, including London, Tokyo, Singapore, and the Middle East.Special briefings for sovereign wealth funds exploring opportunities to diversify each other’s portfolios andDedicated sessions with ratings agencies to address potential concerns regarding Malaysia’s ratings.Strengthening gold reserves
Bank Negara Malaysia should immediately begin increasing its gold reserves in order to:
Reduce dependence on US dollar-denominated assets.Enhance stability in a potentially long-running period of currency volatility andDiversify Malaysia’s reserves in anticipation of significant global economic shifts.Regional solidarity through Asean
As Asean chair, Malaysia should call for an emergency meeting of the bloc’s economic and finance ministers within 14 days to develop a unified response. Key items on the agenda must include:
Establishing a joint Asean negotiation position with the US.Expediting intra-Asean mechanisms to absorb trade disruptions within its largest sectors, or those that make up at least 50% of its markets.Accelerating implementation of existing regional trade agreements.Developing contingency plans for regional supply chains.It is also crucial for Asean to present a unified communication emphasising the region’s importance to global trade, both for American and non-American consumption, e.g., BRICS and the EU, among other more significant trading blocs.
Bypassing lengthy WTO processes
While Kuala Lumpur must continue to maintain — and be seen to maintain — support for rules-based trade, it should not divert precious time and resources to seek a resolution through the WTO within this 90-day pause window.
The WTO’s consensus-based approach and lengthy adjudication processes, while comprehensive and deterministic, make it impractical for addressing issues that require a more immediate resolution.
Conclusion
Malaysia faces significant challenges in navigating the next 90 days, but within such an arguably chaotic environment, a coordinated, multi-pronged approach offers the best path forward.
By simultaneously engaging with the US and China, boosting its economic resilience and strengthening regional solidarity, Malaysia can very reasonably look to emerge with much strengthened trade relationships across its entire export portfolio.
The 90-day pause window demands unprecedented coordination across government agencies, private sector entities, and international partners, but Malaysia’s economic future demands that they be driven by swift and definitive action. - FMT
Mazli Noor is a fellow at the Institute of Corporate Directors Malaysia and an FMT reader.
The views expressed are those of the writer and do not necessarily reflect those of MMKtT.

---