Economic Concerns: Lim Guan Eng Urges Malaysia to Join Forces to Oppose US Tariffs
PETALING JAYA: Former finance minister Lim Guan Eng has expressed concerns over the potential impact of US President Donald Trump’s tariffs on the global economy. Speaking to media, Lim emphasized that the tariffs pose a threat to sustainable economic growth and could cause global inflation, as seen during the Covid-19 pandemic.
Indirect Repercussions
While Malaysia is not directly targeted by Trump’s tariffs, the country will still face indirect repercussions. Lim noted that China has been Malaysia’s largest trading partner for the past 15 years and any negative impact on China’s economy would inevitably affect Malaysia.
Supplies and Components
Lim highlighted that China supplies materials and components in the most efficient and cost-effective manner for Malaysia’s electronics hub. "Any increase in costs will disrupt the supply chain and reduce production output," he said.
Tariff Imposition
Trump has announced that Canadian and Mexican exports to the US will face a 25% tariff from Tuesday, while goods from China, which already face various rates of duties, will see an additional 10% tariff.
Mitigating the Impact
To mitigate the potential impact of Trump’s tariffs, Lim proposed several financial and tax adjustments aimed at reducing business costs, particularly for small and medium-sized enterprises (SMEs). He urged the government to:
- Delay the implementation of the luxury tax
- Postpone targeted subsidies for RON95 to avoid floating its price on the market, which could trigger inflation and increase transportation costs
- Raise the taxable income threshold for the 15% tax rate from RM150,000 to RM300,000
- Adjust the next threshold for the 17% rate from RM600,000 to RM700,000, which would allow SMEs to save up to RM10,000 annually
Government Response
Last month, Foreign Minister Mohamad Hasan announced that the Cabinet would discuss how Trump’s plans to impose tariffs on goods imported into the US might affect the Malaysian economy. He noted that Malaysia and the US are significant trading partners, with Malaysia a key electrical and electronic goods exporter to the country.
Conclusion
As the global economy continues to grapple with the implications of Trump’s tariffs, it is crucial for Malaysia to remain vigilant and proactive in mitigating the impact on its economy. By working together with Canada, Mexico, and China, Malaysia can better navigate this challenging landscape and ensure sustainable economic growth.
Frequently Asked Questions
Q: What is the impact of Trump’s tariffs on the global economy?
A: Trump’s tariffs pose a threat to sustainable economic growth and could cause global inflation, as seen during the Covid-19 pandemic.
Q: How will Malaysia be affected by Trump’s tariffs?
A: While Malaysia is not directly targeted by Trump’s tariffs, the country will still face indirect repercussions due to its trade relationship with China.
Q: What can be done to mitigate the impact of Trump’s tariffs?
A: The government can implement financial and tax adjustments aimed at reducing business costs, particularly for SMEs, and delay the implementation of the luxury tax and postpone targeted subsidies for RON95.