KUALA LUMPUR – The latest tariff hike imposed by the United States on Malaysia should serve as a timely reminder for Putrajaya to strengthen intra-Asean trade and expand engagement with other global partners, says Tan Sri Nazir Razak.
Nazir, who chairs the Asean Business Advisory Council (Asean BAC), said Malaysia must avoid overdependence on any single trading partner, regardless of its economic weight.
He noted that while the US is a major market, the global market is much larger.
“This (tariff) episode should serve as a timely reminder to enhance intra-Asean trade and deepen our engagement with other countries and regions,” he said in a written exclusive to Scoop.
“…and I suspect that there are many opportunities that we have ignored in the past because we took access to the US market for granted.
“There are certainly many more intra-Asean trade and investment opportunities (where) from that amount, only about 22% of total Asean trade is intra-regional.”
Nazir was responding to a query on how a small, open economy like Malaysia can shield itself from sudden tariff hikes and protectionist measures such as the recent US move.
Nazir also urged Asean to act as a bloc in global trade talks, saying there is strength in numbers despite the complexity of joint negotiations.
“So far, Asean has shown cohesiveness by agreeing not to retaliate and by sharing insights on each other’s trade negotiations. Maybe there is room to take a common stance on specific issues like rules-based order, sanctity of existing trade agreements and rules of origin,” he suggested.
Effective August 1, Malaysia will face a 25% blanket tariff on all exports to the US, while Laos faces a 40% rate. Vietnam appears to have reached a tentative deal that may exempt it from the full duties.
The revised US tariff – higher than what was announced in April – was laid out in a letter to Prime Minister Datuk Seri Anwar Ibrahim and later shared by Donald Trump on Truth Social.
Trump claimed the 25% rate is still “far lower than what is required to eliminate the trade deficit imbalance the US is experiencing with Malaysia.”
Anwar has since criticised the growing use of tariffs as political tools, warning they now serve geopolitical ends rather than economic logic.
Govt took right steps
Asked if Putrajaya mishandled the negotiations leading up to the tariff hike, Nazir defended the government’s approach.
He said the Malaysian side acted methodically, with officials avoiding emotional responses and instead relying on structured analysis and re-engagement.
“By all accounts, those talks went well – yet we still saw a steeper tariff imposed on July 7 compared to the reciprocal measures announced on April 2. This was his (Trump’s) surprise for us, but it is not yet cast in stone. The postponement of implementation to August 1 offers a crucial window for further negotiation. So, we must now study the full scope of the tariffs on Malaysia and other nations carefully, and then go back to negotiate.”
Nazir also credited Investment, Trade and Industry Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz for his measured handling of the situation.
“Zafrul first travelled to Washington to engage with relevant US trade officials, then returned home to consult and develop a mandate, before heading back to the US for negotiations.”
Engagement still critical
Nazir warned that retreating from trade talks out of frustration would be counterproductive, even in the face of unpredictable outcomes.
“Early in the Trump presidency, Malaysia had no ambassador in place, which was very unfortunate. (The) early days of an administration are the time to build new networks and relationships, (and) I am glad that we now have a seasoned diplomat in place.
“In the final analysis, the government needs to get the best possible trade deal with the US. But we have our ‘red lines’ and they evidently come at a cost vis-à-vis tariffs. And to get to the optimal dial, the government needs to consult widely and have our best analysts and negotiators on the team.”
He added that the current team at the Investment, Trade and Industry Ministry has proven capable of securing investor confidence, and that Malaysia is in good hands. – July 11, 2025