Concluding Trade Talks With US Early To Benefit Malaysia, Safeguard Economy From Punitive Tariffs - Economist
KUALA LUMPUR, Sept 26 (Bernama) -- Concluding tariff negotiations with the United States (US) ahead of President Donald Trump’s October visit is crucial for Malaysia, both to safeguard billions in export value and to strengthen its position as a reliable, forward-looking trading nation, an economist said.
IPPFA Sdn Bhd director and country economist Mohd Sedek Jantan warned that delays in reaching a trade agreement could expose Malaysia’s economy to punitive tariffs and undermine its negotiating position.
He said: "Securing the agreement before the summit is not just tactical but a strategic necessity, as the US has increasingly adopted a ‘first-mover advantage’ in trade policy.
“The US rewards those who conclude deals early, while leaving laggards vulnerable to punitive tariffs and heightened scrutiny. In that context, timing is everything,” he told Bernama on Friday, in response to calls for both countries to conclude trade talks ahead of the ASEAN Summit later in October.
He said that postponement could expose structural vulnerabilities, risking not only immediate export losses but also a deeper entrenchment of dependency that would undermine economic sovereignty and long-term negotiating power.
Investment, Trade and Industry Minister Tengku Zafrul Abdul Aziz, who held bilateral discussions with US Trade Representative (USTR) Jamieson Greer, confirmed that Malaysia and the US aim to conclude their tariff talks ahead of Trump’s October visit to Kuala Lumpur for the ASEAN Summit.
Greer was in Kuala Lumpur to attend consultations between ASEAN and the US at the ongoing 57th ASEAN Economic Ministers’ Meetings (AEM) and Related Meetings.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid described the impending talks as encouraging, reflecting momentum towards a “win-win” outcome.
“When tariffs are reduced from 25 per cent to 19 per cent, that signals both sides are serious. It is a live negotiation, but this is a positive indication that a middle ground can be achieved, potentially invigorating bilateral trade in terms of income and investment between Malaysia and the US,” he said.
Safeguarding Key Sectors and Investor Confidence
Mohd Afzanizam noted that the US seeks market access, particularly concerning non-tariff barriers, as stated in the USTR’s report in April.
The report lists trade barriers faced by US exporters, including tariffs and non-tariff measures on alcohol, poultry, beef, government procurement preferences, intellectual property, internet regulations, and local equity rules.
He added that cooperation on agricultural exports – including halal-certified meat from the US – could benefit both sides, supporting American farmers while strengthening Malaysia’s food security.
“Halal certification has posed a challenge for US meat exporters seeking access to the Malaysian market. If resolved, American farmers could enter new markets, while Malaysia would benefit from a broader supply of imported meat, potentially lowering prices,” he said.
Mohd Sedek highlighted that a timely agreement would protect Malaysia’s semiconductor and pharmaceutical sectors from potential tariff hikes while cementing the country’s reputation as a proactive participant in global trade diplomacy.
He noted that the US absorbed nearly 15 per cent of Malaysia’s exports last year, worth over US$43 billion, with semiconductors representing a substantial share of both Malaysia’s shipments and global supply.
“Delays risk leaving those industries at the mercy of Washington’s security-driven reviews. A pre-emptive agreement would lock in tariff ceilings and carve-outs for strategic sectors such as semiconductors and pharmaceuticals, providing exporters with insulation that rivals like Vietnam have not secured,” he said.
He added that early closure would prevent an export shock worth several billion dollars while reinforcing efficiency gains from Malaysia’s specialisation in high-value technology. From a business lens, this would signal that Malaysia is shaping the terms of engagement rather than reacting passively.
Global investors value predictability, which could be reinforced by US firms such as Intel committing billions to Penang and Petronas being engaged in significant LNG contracts.
ASEAN Leadership and Regional Diplomacy
Mohd Sedek opined that by finalising a bilateral agreement ahead of the summit, Malaysia would project a clear message of constructive leadership to its ASEAN peers.
As ASEAN chair, Malaysia positions itself not merely as a beneficiary of pragmatic bilateralism, but also as an advocate of strategies that enhance regional resilience while maintaining ASEAN’s centrality in wider multilateral forums.
“Under the banner of 'Inclusivity and Sustainability', Malaysia can act as a bridge-builder between national interests and regional priorities,” he said.
He added that by advancing such initiatives, including proposals for an ASEAN-US summit, Malaysia underscores its role as a neutral convener amid intensifying US-China competition.
“This enhances not only its own soft power but also the bloc’s collective bargaining position, encouraging peers to view bilateralism as a tool for strengthening rather than diluting ASEAN cohesion,” said Mohd Sedek.
-- BERNAMA
