By Pravin Periasamy
In his “Liberation Day“ speech on 2 April, US President Donald Trump announced his administration would implement sweeping tariffs on US imports.
The apparent rationale for these “reciprocal tariffs” was to address America’s overall trade deficit.
The impact of these tariffs shook up the global economic system, prompting some nations to rush to the negotiation table.
Some countries, like China, have retaliated with tariffs of their own on all US imports.
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The US has imposed a 24% tariff on imports from Malaysia’s in response to what it claims are Malaysia’s alleged 47% ‘tariffs’.
In a strategic response to this move, Malaysia first disputed how the US had calculated the tariff measures.
Investment, Trade and Industry Minister Tengku Zafrul Aziz said the US had raised concerns over its trade deficit with Malaysia. In 2024, the US imported $52.5bn worth of goods from Malaysia and exported $27.7bn in return. The resulting $24.8bn deficit, Washington argues, warrants the imposition of ‘reciprocal’ tariffs to rebalance trade dynamics.
But how exactly does one define reciprocity in tariffs?
From a US perspective, reciprocity is being interpreted through the lens of balance-of-trade maths. The US calculates its 47% figure by dividing the $24.8bn deficit by the total US imports from Malaysia.
Hence, the idea of a reciprocal response to adjust tariffs. As a concession, the US proposed a 24% tariff on imports from Malaysia.
Malaysia contests this logic, and with good reason. Tariffs are not tools to offset imbalances like balancing a cheque book. They serve as economic instruments set within the framework of domestic policy, market competitiveness and multilateral commitments (particularly under the World Trade Organization).
Malaysia’s own average tariff on US imports stands at just 5.6%, with many imported goods facing zero tariffs altogether.
From this vantage point, a truly reciprocal tariff would involve the US mirroring Malaysia’s actual tariff levels, not calculating duties based on trade deficits.
Trade imbalances result from a complex web of factors – supply chains, investment flows, currency valuations and comparative advantage – not simply by who imposes what tariff on whom. The imposition of such disproportionate tariffs could backfire.
With global protectionism on the rise, Malaysia should take this moment to deepen its intra-Asean trade links.
Asean, with a combined gross domestic product (GDP) of over $3.6tn and a rapidly growing middle class, offers immense untapped potential.
Though Asean has made strides toward economic integration, much remains to be done. The regional grouping has to reduce non-tariff barriers, standardise regulations and build seamless logistics infrastructure across borders.
Pravin Periasamy is the networking and partnership director of the Malaysian Philosophy Society.
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