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Malaysia’s US tariff deal comes with US$240 billion price tag
Analysts warn unfunded government commitments could drain state funds and far outstrip the country’s existing trade imbalance with the US
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Malaysia’s initial relief at securing a 19 per cent tariff from Washington is rapidly giving way to the reality of a US$240 billion obligation to address the US deficit in bilateral trade, with analysts warning the burden could ultimately leave the country at a disadvantage.
Following months of threats from President Donald Trump and protracted negotiations with Washington, Southeast Asia’s economies were hit with a range of US tariffs last week.
Most of the region’s largest economies – Indonesia, Thailand, the Philippines and Malaysia – are subject to a 19 per cent tariff, while Vietnam faces a 20 per cent levy. For all, the United States is a key export market.
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The tariff figures were initially welcomed as a reprieve, particularly when compared to rates that went as high as 49 per cent when first proposed. Yet concerns are mounting that Southeast Asian nations may be left paying a steep price for years to come because of their separate tariff deals.
Malaysia’s Trade Minister Tengku Zafrul Aziz told parliament on Monday that the country’s major firms would have to fork out as much as US$150 billion over five years to buy high-tech US products under the deal reached with Washington.
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The agreement includes an earlier US$19 billion commitment by national carrier Malaysia Airlines to acquire up to 60 Boeing commercial jets, as well as an annual US$3.4 billion purchase of US liquefied natural gas by state energy giant Petronas.
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