Tengku Zafrul Explains US Tariffs Like It’s A Retail Showdown
Tengku Zafrul covers the reasoning behind the US tariffs and how Malaysia is going to respond to the imposed tariff rates.
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United States President Donald Trump announced tariffs on imports last week, sending shockwaves globally and plunging stock markets everywhere hours after the announcement.
Trump decided that tariffs are needed to boost American jobs and investments despite many cautions that the US should be careful and reconsider its options.
READ MORE: Malaysia Dodges The Worst Of Trump’s Trade Smackdown: Here’s Why
Tengku Zafrul explains how the tariff rates work
How does the tariff affect Malaysia? Based on the list, Malaysia is hit with a 24% tariff on US imports starting on 5 April.
Minister of Investment, Trade, and Industry Tengku Zafrul Aziz made a video to put the tariff calculation into context so the public can picture what goes on with the tariff charges.
Tengku Zafrul starts by asking everyone to visualise America as a big store and they’re currently not happy that Americans prefer buying from other stores or non-American-made products that are cheaper.
To discourage Americans from buying from other shops, they decided to impose an extra charge on the other stores that stock their items in the American shop.
@tzafrul_aziz Tarif Trump jejaskan dunia, Malaysia turut terkesan! 💥🇲🇾 Apa langkah kita hadapi gelombang tarif baru ini? 🤔 #TZA #MITI #PemacuPotensiGlobal #MADANIBekerja #tarif #USA #trump #perdagangan #ekonomi
♬ original sound – Tengku Zafrul Aziz
With these extra charges (imposed using tariffs) driving up the price of the items, it’s hoped that American locals will stop buying the items and American factories will return to base in the US to lower production costs.
For example, a shirt made in China that usually costs USD100 for American buyers will cost USD154 after China gets slapped with a 54% tariff.
However, keep in mind that this example given shows a simplified calculation which hasn’t included extra costs like production costs and more.
Countries hit with the tariffs may experience a slower economy or a profit loss. To manage potential losses, some countries are imposing their tariff charges against the US.
TLDR: The tariff war and US product boycotts are on in some countries! Participating in boycotts and taking part in a tariff war may feel like a minor win but everyone truly loses out in the long run.
Some thoughts on the Trump tariffs from a Malaysian perspective:
— Yin Shao Loong (@yinshaoloong) April 3, 2025
1. Malaysia isn’t being singled out. Tariffs are being hiked for all countries not already sanctioned by the US (eg. DPRK, Russia). Hike is a minimum of 10% even for countries with a USFTA (eg 🇸🇬).#TrumpTariffs pic.twitter.com/9Cgxa4IXX3
How did the US calculate the tariff rates?
In this regard, many believe it was done using junk maths.
According to the New York Times, the tariff rate is calculated by taking the trade deficit that America runs with that nation and dividing it by the exports that the country sends to the US.
Trump said he would be kind so the final tariff number is actually halved.
13. How was the 47% rate arrived at?
— Yin Shao Loong (@yinshaoloong) April 3, 2025
Punitive tariff rate = (Trade balance / US imports from Malaysia) = 24.8bn / 52.5bn = 47%
This is a nonsense voodoo formula with no credibility because trade balances ≠ tariff rates.
Based only on 2024 data, not even long-term trends. pic.twitter.com/v4kFrSBA7P
What does Malaysia import to the US to be hit with 24%?
The items include electrical machinery, mechanical machinery (including nuclear reactors, boilers, machinery, mechanical appliances, parts etc), medical instruments, rubber, furniture, iron and steel, and more.
However, some items are exempt from the tariffs such as goods like steel/aluminium auto parts that are already under Section 232 tariffs, copper, pharmaceuticals, semiconductors, and lumber.
I dug into the White House's list of 1039 tariff-exempt items.
— Thevesh (@Thevesh) April 4, 2025
Here's the final result: Using the most granular trade data available for the past 1 year, 24.2% of Malaysia's exports to US would be tariff-free.
This means 75.8% of our exports to US (10.2% of exports overall)… pic.twitter.com/UFDRVY9feI
Wanna correct one misleading thing on the first chart:
— Thevesh (@Thevesh) April 4, 2025
I labelled HS Code 84 as 'Nuclear Reactors'.
The full definition is: "Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof.
Basically, it encompasses a wide range of products, and nuclear reactors…
5. Lots of Malaysia’s trade surplus with the US is in electrical and electronic goods like semiconductors. These are exempted from the new tariffs. We have a zero tariff rate on chips from the USin any case. pic.twitter.com/LQlAVZiCni
— Yin Shao Loong (@yinshaoloong) April 3, 2025
How has the Malaysian government responded to the tariff announcement?
Prime Minister Datuk Seri Anwar Ibrahim said the government is implementing precise, swift, and calm measures to address the US tariffs.
Anwar said the additional tariffs go against the principles of free, non-discriminatory, predictable, and open trade under the World Trade Organization.
He added that the tariffs had also impacted Malaysia’s trade and investment partners and it’ll hit global economic growth.
For now, Anwar said Malaysia will not introduce retaliatory tariffs until a discussion is held between the US and ASEAN partners to secure fair outcomes.
The MADANI government is implementing precise, swift, and calm measures to address the unilateral tariffs imposed by the United States.
— Anwar Ibrahim (@anwaribrahim) April 6, 2025
Our goal is clear. We want to secure a favourable resolution that preserves vital market access, attracts continued foreign investment, and… pic.twitter.com/LJtpcXdu5R
Meanwhile, Tengku Zafrul said Malaysia expected the tariff charges to come in and has prepared accordingly by diversifying imports to other countries such as Kenya, Oman, Namibia, Angola, Ethiopia, Egypt, and Algeria last year.
Malaysia has also signed the Malaysia-United Arab Emirates Comprehensive Economic Partnership Agreement (MY-UAE CEPA) with the United Arab Emirates, which allows Malaysian exporters to benefit from zero-tariff access.
Additionally, Malaysia is engaged in negotiations for free trade agreements (FTAs) with the European Union and South Korea.
Since Malaysia is the ASEAN 2025 chair, one of the country’s focus is to expand export trade with ASEAN countries.
Malaysia also set up the National Geoeconomic Command Centre (NGCC) last month to strategically manage global geoeconomic situations like the one we’re currently in.
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