Malaysia-China ties not reason behind imposition of US tariffs, says Zafrul
KUALA LUMPUR (May 5): Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz on Monday dismissed claims that Malaysia’s close ties with China were the primary reason behind the latest round of US tariffs targeting Malaysian goods.
Wrapping up the special parliamentary session, Zafrul said US representatives did not raise Malaysia-China relations during his recent meetings with them.
“Instead, they acknowledged that Malaysia and other Asean countries naturally have trade relationships with China,” he noted.
According to Zafrul, the main concerns raised by the US were related to the security of technology supply chains and the misuse of transshipment hubs.
“The US wants to ensure that companies producing high-end technologies do not transfer them to China, unless such transfers fall outside export restrictions,” he said.
He also noted that the US had raised concerns about non-tariff barriers, urging Malaysia to provide equal treatment to US companies as it does to Chinese firms.
Nevertheless, Zafrul emphasised that negotiations with the United States Trade Representative (USTR), currently led by Miti deputy secretary general Mastura Ahmad Mustafa, remain in the early stages and are focused primarily on defining the scope and technical details.
While the discussions are covered by a non-disclosure agreement (NDA), he reaffirmed the government’s commitment to good governance, adding that any policy involving structural decisions would undergo three stages, including strict internal review, Cabinet approval and presentation in Parliament.
The tariffs, announced by US President Donald Trump on April 2, consist of a blanket 10% duty on all imports and an additional 24% tariff specifically targeting Malaysian products. The move has sparked concern among Malaysian policymakers and industry stakeholders, given the country’s export exposure to the US.
On April 9, the US administration postponed the country-specific tariffs for 90 days to allow further negotiations with over 75 affected countries. The general 10% tariff remains in effect indefinitely. In contrast, tariffs on Chinese goods have soared to a cumulative rate of 145%.
Zafrul outlines four key US concerns behind tariff move
Speaking at a press conference on the sidelines of the Dewan Rakyat session, Zafrul said that US authorities had highlighted four primary areas of concern prior to the imposition of the tariff that include trade imbalance, non-tariff barriers, technology safeguards and investment alignment.
“The US sees Malaysia as contributing to its trade deficit. Based on their data, the deficit with Malaysia stands at US$25 billion (RM105.4 billion),” said Zafrul. “This is viewed unfavourably and is one of the factors driving their tariff decisions.”
Zafrul added that the USTR’s National Trade Estimate (NTE) report cited several non-tariff barriers in Malaysia. One example raised by the US was the longer-than-average processing time for halal certifications, perceived as a trade barrier. “It’s not the certification itself, but the lengthy process that they question,” he explained.
On technology safeguards, the US has raised concerns about technology transfers and the potential re-export of sensitive tech components. “They want to ensure that chips exported to Malaysia or other regional countries do not end up in jurisdictions they consider high-risk,” said Zafrul. “The concern extends to both export control and end-use restrictions.”
Zafrul also added that the US is keen to see Malaysia’s support towards industries that are aligned with American interests. “We’ve assured them that our government-linked investment companies (GLICs) have invested close to US$45 billion in US equities and bonds. This shows our commitment to maintaining robust financial ties,” he said.
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