Tengku Zafrul said while Malaysia’s semiconductor and pharmaceutical sectors continue to enjoy 0% tariffs, a 19% tariff will be imposed on other goods beginning Aug 8, although discussions are ongoing to further reduce the rate.
“We will continue to engage with the US and provide them with a list of products we believe should be subject to 0% tariffs,” he said at a press conference today.
“These are mostly agricultural products that the US cannot produce, such as cocoa and rubber. We have submitted our list,” he said, adding that a joint Malaysia-US statement on the tariffs is expected to be issued this weekend.
Earlier today, the US announced a 19% tariff imposed on Malaysian exports, a reduction from the 25% tariff previously imposed.
Asked whether there will be a formal tariff review mechanism built into the arrangement, Tengku Zafrul said he was uncertain whether the matter was discussed during negotiations.
No compromise on cars
He also said Malaysia had drawn a clear line during negotiations when it came to domestic tax policies, explaining that US negotiators wanted Malaysia to abolish excise duties on automobiles, tobacco and alcohol.
“The automotive sector is very important to the US, (but) that was a ‘red line’ for us. Among the things we didn’t compromise on is the automotive industry. We have our national cars and our automotive industry, which employs 700,000 workers.
“The US was concerned about our import duties on cars and the approved permit (AP) scheme for imported cars. To them, this was not fair,” he said.
Tengku Zafrul dismissed claims that the US had made a request for exclusive access to rare earth products from Malaysia.
“I don’t know where it is coming from, because there are many speculations. But I can attest that there is no request from the US to exclusively have access to our rare earth (product),” he said.
There was no agreement that Malaysia had to exclusively supply rare earth to the US or any other countries, including neighbouring countries or China, he said.
Thai-Cambodia dispute
On whether recent diplomatic developments may have contributed to the reduction in the tariff rate, Tengku Zafrul said the ceasefire agreement between Cambodia and Thailand likely played a role.
On Monday, Prime Minister Anwar Ibrahim announced that Cambodia and Thailand had agreed to a ceasefire following deadly clashes along their border. The agreement followed a meeting in Putrajaya attended by Anwar, Cambodian prime minister Hun Manet and Thailand’s acting prime minister, Phumtham Wechayachai.
“I don’t know how much, but it (ceasefire) certainly did help,” said Tengku Zafrul. “Anwar and Trump did talk about it (during their phone call yesterday) and I feel it (ceasefire) gave a good impression.”