Malaysia gained most tariff exemption from US – research house
CGS International Research revealed that Malaysia gained most tariff exemption from the US compared to its ASEAN counterparts.
Over 60 per cent of Malaysia’s exports to the US now have zero-tariff status. Malaysia leads in tariff exemptions. Thailand and Vietnam come in second and third place respectively.
“Post the Oct 26 tariff exemptions, our calculation shows that Malaysia now has over 60 per cent products exempted and Thailand and Vietnam at over 40 per cent,” said the research house in a note.
It added the exposure to US tariffs remain uneven across the region despite the concessions.
“For Malaysia and Thailand, direct exposure is reduced to single-digits. For Indonesia and Singapore, despite not accorded the Oct 26 exemptions, direct exposure remained low,” it said.
CGS International Research believes the tariff risk in Asean “may not be as severe as markets fear”, due to phased implementation and policy flexibility granted to the region.
The US has asked ASEAN economies to gradually reduce tariffs and CGS International expects Washington to apply a similar gradual approach when raising its own.
“We think the US will take a similar approach to raising theirs, providing time for asean to readjust its strategy and minimising supply chain disruption,” it said.
It added that the US has agreed to grant “special consideration” to four ASEAN countries should future tariff increases occur, although this still falls short of the protections offered to the European Union and Japan.
The firm also pointed out that past US tariff efforts typically included carve-outs for companies with operations in America, a factor that works in ASEAN’s favour.
“The strong presence of US-based multinational companies in ASEAN reduces this risk. We think ASEAN is diversifying its trade to weather the adverse effect of the reciprocal tariff.
“Already, ASEAN members are working to secure new trade deals, including a bilateral European Union Free Trade Agreement,” it said.