In a written parliamentary reply, Tengku Zafrul said Malaysia’s trade with the US grew 15.4% to RM270.9 billion between January and September, compared with RM234.68 billion during the same period last year.
Given the large trade volume, he said, any retaliatory tariffs imposed by Washington would have directly affected Malaysia’s economy if not addressed prudently through negotiations.
Tengku Zafrul said high retaliatory tariffs, such as the 25% announced on July 7, could have made Malaysian goods less competitive in the US market and led to reduced demand, lower profits, and even job cuts if not managed carefully.
He said the government adopted a “whole-of-government” approach through trade diplomacy to safeguard national interests, leading to successful negotiations concluded between Prime Minister Anwar Ibrahim and US president Donald Trump on Oct 26.
“As a result, the retaliatory tariff imposed on Aug 1 was maintained at 19%,” he said.
Tengku Zafrul said based on data from the statistics department, more than 7,700 Malaysian companies were involved in export activities to the US in 2024. These companies employed about 1.1 million workers, with electrical and electronic products being the main contributors.
“If Malaysia had chosen not to engage in negotiations or had imposed counter-tariffs on the US, it could have negatively impacted export markets worth RM198.65 billion across multiple sectors that support the economy, including SMEs.
“The economy risks being affected if local and foreign companies operating in Malaysia implement cost-cutting measures, particularly through workforce reductions or delaying investment expansion.
“Worse still, investors may relocate operations to other countries that face lower tariffs or offer more conducive investment environments,” he said.
He said it would have also directly disrupted local supply chains, especially SMEs that supply export industries, particularly those linked to the US market.
The reciprocal trade agreement Anwar signed with Trump last month has been criticised by various parties for allegedly ceding Malaysia’s sovereignty.
The deal’s critics say it effectively ties Malaysia to the US’s interests and leaves the country unable to make decisions independently.
However, Anwar has rubbished those claims and said the Attorney-General’s Chambers was consulted to ensure that provisions in the agreement did not contravene the “spirit of the Federal Constitution and domestic laws”.
Anwar also said Malaysia has always adopted a “give and take” approach in all free trade agreements it signed with other nations.