KUALA LUMPUR — Malaysia will not slip into recession due to the imposition of tariffs by the United States, as the country’s economy remains resilient, Prime Minister Datuk Seri Anwar Ibrahim said today.
Describing the calculation of the tariff rates, including the 24% on Malaysia, as “flawed”, Anwar said the country’s economy remains resilient.
“If the 24% tariff were implemented, from an economic perspective, the 2025 Gross Domestic Product (GDP) growth projection of 4.5% to 5.5% will need to be reviewed.’
“However, for now, let me reassure you that the government does not foresee a recession in Malaysia,” Anwar, who is also Finance Minister said in a special video message to address the US tariffs.
This is because the country’s macroeconomic foundations remain strong, supported by robust household spending, strong domestic investment, healthy tourism receipts and the continued implementation of national masterplans for various sectors and industries.
He reiterated that Putrajaya will not introduce retaliatory tariffs, and had launched high-level negotiations with the US on the matter to find a fair solution.
“Our sound economic fundamentals, therefore, will enable us to weather this challenge from a position of strength and preparedness,” Anwar said.
However, he acknowledged the challenges to certain sectors that the 24% tariff would bring.
“While some exemptions partially shield semiconductors, which is Malaysia’s largest export category to the US, nevertheless, these new tariffs will still adversely impact many of our Malaysian industries including textiles, furniture, rubber and plastics.”
He also anticipated mid-to-long-term impact, as Malaysia’s is one of the US’ largest trading partners in this region and a major destination of US-based foreign direct investment.
“These tariffs have also impacted almost every other trade and investment partner of Malaysia and will likely hit global economic growth,” said Anwar.
The Prime Minister said the government understands the concerns, anxieties and difficulties faced by the workers, manufacturers and businesses.
“We affirm our determination to overcome and adapt to this challenge.”
“Make no mistake, we are taking these tariffs seriously because it challenges the fundamental principle of nondiscrimination underpinning global trade rules.”
“Further, it strikes at the heart of Malaysia’s identity as a proud non-aligned trading nation, affecting the livelihoods and economic security of countless Malaysians who depend upon open and fair access to international markets,” he said.
‘Flawed calculation’
Anwar also said Malaysia refutes the claim by the US that it imposes a 47% tariff on US imports
“The basis for calculating this tariff is fundamentally flawed, which has inaccurately resulted in Malaysia being imposed a reciprocal tariff of 24%.
“Yet, our response will be calm, firm and guided by Malaysia’s strategic interests.
“Our goal is clear. We are fully committed to securing a favourable resolution that preserves vital market access, attracts continued foreign investment, and supports the well-being of Malaysian workers and businesses,” the prime minister said.
He also described the US’ unilateral decision on reciprocal tariffs as a “major threat to the current global trade and investment system”.
“Tariffs imposed on every country that trades with the US (is) a rejection of the principles of free, non-discriminatory, predictable and open trade under the Geneva-based World Trade Organisation (WTO) … an organisation established by, among others, the US itself in 1948 through the General Agreement on Tariffs & Trade (GATT),” he added.
US President Donald Trump on April 2 announced 10% tariffs on all products shipped to the US effective April 5, and from April 9, 24% tariff on most Malaysian products.
The move against 168 countries, at varying tariff rates, has riled markets and started a global trade war, after China retaliated.
Anwar said the Madani government will engage constructively with the US to safeguard vital market access, preserve investor confidence and secure fair outcomes for the country’s exporters.
“In short, we must find a mutually acceptable, fair and equitable solution to this problem. Some of these efforts are already underway.
“Our trade and foreign ministries are analysing the impact of the tariffs in detail, running simulations, consulting stakeholders across industries and communicating directly with US government counterparts as well as American firms which have long operated in Malaysia.”
“Our trade is built upon a diversified network of regional and global partnerships consolidated over many years – including through ASEAN, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Regional Comprehensive Economic Partnership (RCEP), and ongoing negotiations with the European Union and deepening ties across the Global South,” he said.
“The government has taken several initial steps to address the impact of tariffs, including the establishment of the National Geo-economic Command Centre (NGCC), which I chair,” he said. – April 6, 2025