Hwang Sin Ye
On 2 April 2025, U.S. President Donald Trump announced a sweeping set of new import tariffs, aimed at various countries around the world. As the situation continues to evolve, the ripple effects are expected to be felt worldwide — including here in Malaysia.
Even if you are a Malaysian company that primarily sources locally and does not export to the U.S., it’s tempting to hope that this may not significantly affect your procurement team. But in an interconnected global economy, even indirect exposure can have significant consequences.
Here’s a breakdown of the tariff announcement — and more importantly, what procurement departments in Malaysia should be watching out for.
📰 A Quick Recap of the Tariff Announcement
- Baseline 10% Tariff: At minimum, a 10% tariff will apply to all imports into the United States from countries not specifically targeted, effective 5 April 2025.
- Country-Specific Tariffs: Specific countries will face higher, targeted tariffs. This includes Malaysia (24%), the European Union (20%), Vietnam (46%) Thailand: (36%), Indonesia (32%), and many more.
- 90-Day Pause and Rapid Changes: Except for China, these tariffs were then paused for 90 days starting from 9 April 2025. However, the situation remains volatile with rapid shifts in tariffs and trade policies – meaning that any fixed tariff figures could become outdated within days.
If these tariffs go through, they are expected to trigger retaliatory measures from many affected countries, potentially sparking a global trade war.
🛒 How Might This Affect Your Procurement — Even if You Buy and Sell Locally?
✅ Minimal Direct Impact – But Only on the Surface
Your company’s direct exposure may be limited if:
- You source mostly from Malaysian suppliers
- You don’t trade with the U.S.
However, indirect impact is still very likely, particularly in how your suppliers operate and price their goods.
⚠️ Indirect Cost Increases from Suppliers
Many local suppliers source raw materials or components from countries facing steep U.S. tariffs (e.g., China, Thailand, Vietnam, and Indonesia). These suppliers may face:
- Disruptions in their supply chains
- Increased competition for raw materials
- Higher production costs, which could be passed on to you
📦 Shift in Global Supply Chains
Exporters from heavily affected regions may look to diverting goods to ASEAN markets, leading to:
- Increased competition for locally available goods
- Price inflation for certain products
- Longer lead times or availability issues
📊 What Should Procurement Teams in Malaysia Do?
1. Get Visibility on Your Supplier Dependencies
Start conversations with your key vendors about their:
- Exposure to U.S. tariffs (direct or upstream)
- Potential pricing changes
2. Monitor for Price Volatility
Tariff-driven shifts could cause short-term pricing instability. Adjust your procurement strategy to:
- Lock in prices where possible
- Avoid long-term commitments on volatile goods
- Build contingency into budgets
3. Diversify and Strengthen Supplier Networks
Now is a good time to:
- Identify alternative suppliers with lower exposure
- Strengthen relationships with reliable partners
- Consider local substitutes for imported materials
4. Update Contract Terms
Revisit agreements to include:
- Clauses around market-driven price changes
- Flexibility for renegotiation
- Triggers for force majeure or tariff-related events
5. Stay Informed, Stay Agile
With a potential trade war unfolding, things could escalate quickly. Designate someone on your team to:
- Track global trade developments
- Monitor raw material indices
- Update internal stakeholders regularly
💡 Final Thoughts
While Malaysia isn’t in the direct line of fire from the U.S. tariffs, no country is completely insulated from global economic shocks. Procurement teams must be proactive — not just reactive — in preparing for disruptions that may occur in supply chains, pricing, or product availability.
By strengthening supplier relationships, staying informed, and building flexibility into your procurement strategy, your team can weather the uncertainties of the months ahead.