Commercial lawyer Raja Nadhil Aqran said businesses should review their contracts “to make sure (such) things are addressed properly”, while his Austrian counterpart Harald Sippel said steps should be taken to protect them from the negative impact of major changes.
Nadhil observed that Asian companies tend to take a wait-and-see approach when faced with major challenges such as the tariffs.
“(They typically say) ‘we’ll play it by ear, see how it goes. Wait until other people do something, and then we’ll follow’,” he said at a seminar on the impact of tariffs on Malaysian companies at the Malaysian-German Chamber of Commerce and Industry earlier this week.
Last month, the Trump administration announced that it was imposing a range of “reciprocal” tariffs on about 60 countries, including Malaysia which will see a 24% levy on its exports to the US.
While the tariffs have been paused for 90 days from April 9 to July 8 to allow for trade negotiations, a 10% blanket duty on almost all imports into the US remains in place.
Malaysia is the second-largest semiconductor manufacturer in the world, with 60% of its exports going to the US.
Investment, trade and industry minister Tengku Zafrul Aziz said the government is approaching current negotiations with the US from “a position of strength”, as the economy grew 5.1% last year and remains stable.
Nadhil said companies should subject themselves to an audit to determine which parts of the supply chain would be affected by the tariffs.
Sippel said although existing contracts already “say what they say”, all parties involved can mutually agree to amendments.
However, he said, contracts drawn up after the introduction of the tariffs should be future-proofed with clauses written specifically to withstand any negative impact from major changes.
“As a lawyer, I must say that nothing is certain in life. We don’t know what’s going to happen – maybe we’ll stick with the 10% baseline (blanket duty), maybe we’ll go back to the 24% reciprocal tariffs,” he said.
He said other possibilities include an escalation of the US-China trade war, or a removal of tariffs between the US and EU, followed by the EU imposing similar tariffs on other countries.
“There is a lot of uncertainty, and your contracts must reflect this uncertainty,” he added.
Nadhil said any clause to future-proof contracts must cover price adjustments to determine how and when prices can be changed.
He said contracts must also include force majeure clauses that relieve parties from liability in circumstances that are impossible to control, and termination clauses to allow parties to exit contracts.