Malaysia mobilizes Asean against US tariffs as economic concerns mount

[MALAYSIA] Malaysia will take the lead in coordinating a regional reaction in Southeast Asia to US President Donald Trump's tariffs, according to Prime Minister Anwar Ibrahim.

"Malaysia, as Asean chair, will lead efforts to present a united regional front, maintain open and resilient supply chains, and ensure Asean's collective voice is heard clearly and firmly on the international stage," Anwar said in a video message posted late Sunday on his social media channels.

The tariffs, which target steel and aluminum imports, have reignited tensions between the US and Southeast Asian nations, many of which rely heavily on exports to sustain their economies. Analysts warn that the measures could disrupt regional trade flows and dampen economic recovery efforts post-pandemic. The Biden administration had previously paused these tariffs for review, but Trump’s reintroduction of the policy has forced Asean members to reassess their trade strategies.

In a separate statement, Anwar said he spoke with Vietnamese Prime Minister Pham Minh Chinh about a regional response. The Malaysian leader also addressed tariffs with Indonesian President Prabowo Subianto, who arrived on Sunday evening, according to Anwar's Facebook post.

The discussions come amid broader concerns over rising protectionism in global trade, with Asean nations increasingly seeking to diversify their export markets to reduce dependence on the US and China. Regional trade pacts such as the Regional Comprehensive Economic Partnership (RCEP) are expected to play a larger role in mitigating the impact of unilateral tariffs, though their effectiveness in the short term remains uncertain.

Countries in the Association of Southeast Asian Nations (ASEAN), a grouping of ten countries in the region, are among those most affected by US tariffs. The Trump administration imposed tariffs of 46% and 49% on Vietnam and Cambodia, respectively, while Malaysia was charged a rate of 24%.

Industry groups in Malaysia have expressed alarm over the potential ripple effects, particularly on small and medium-sized enterprises (SMEs) that form the backbone of the country’s manufacturing sector. The Malaysian International Chamber of Commerce and Industry (MICCI) has urged the government to expedite negotiations with Washington, warning that prolonged tariffs could lead to job losses and reduced foreign investment.

Malaysia, like its regional rivals, chose not to respond against tariffs while seeking discussion, but has denied the Trump administration's claim that it levies a 47% tariff on US imports. Anwar stated that the government has established a geoeconomic command center and was already working with the United States to find a "mutually acceptable solution". He stated that the approach will be "calm, firm, and guided by Malaysia's national interests".

Meanwhile, economists suggest that Malaysia’s diversified export portfolio, including strong demand for electronics and palm oil, could provide some buffer against the tariffs. However, they caution that prolonged trade tensions may necessitate adjustments in fiscal policy, including potential stimulus measures to support affected industries.

He reiterated earlier assertions that the country would not enter into a recession due to the tariffs, but said the government might review its gross domestic product growth targets for this year should the tariffs come into effect on April 9.