Source: The Sun Daily
The Malaysian Iron and Steel Industry Federation (Misif) deems the US’s inclusion of Malaysia among the steel-exporting countries to face potential tariffs as “wrong", and will bring its grouses to the Ministry of International Trade and Industry and the US Embassy.
Misif president Datuk Soh Thian Lai said for the whole of last year, Malaysia exported only about 96,000 tonnes of steel to the US, compared with the country’s total steel imports of almost 30 million tonnes.
“Malaysia is not causing injury to the US with only 96,000 tonnes worth of exports. The US always stated that if the raw material is from China, they will impose trade measures.
“Malaysia exports flight products to the US. Our raw materials for this flight products are not from China because Malaysia already has anti-dumping duties on China for hot-rolled coils. Our raw materials are from other countries such as Japan and Korea. The US has put the wrong country into their Section 232,” he added.
Miti declined to respond to SunBiz’s queries on the issue.
Earlier this week, the US Commerce Department recommended the imposition of tariffs of at least 23% on all steel products from all countries or at least 53% on all steel imports from 12 countries, namely Brazil, China, Costa Rica, Egypt, India, Malaysia, Russia, South Korea, South Africa, Thailand, Turkey and Vietnam.
It also recommended a tariff of at least 7.7% on all aluminium products from all countries.
US President Donald Trump has the final say on the imposition of the duties. In January, Trump announced that the US would subject a 30% tariff on imported solar cells and modules.
Economists contacted did not see the recent announcements by the US as significant strides in its protectionist agenda, calling it more likely steps to gain political mileage ahead of the mid-term elections in November this year.
“On protectionism, the US administration’s bark has been worse than its bite. Yes, there have been some very selective tariffs imposed but don’t forget president Barack Obama had imposed tariffs on tyres and president George Bush on steel. US administrations do that from time to time for political ends.
"But Trump’s campaign rhetoric had been, among other things, about a border tax and large unilateral tariffs on Chinese goods, none of which have yet to pass,” RHB Banking Group chief economist Dr Arup Raha told SunBiz via email, adding that the larger change is likely to come in reworking trade deals.
Notwithstanding that, he said, given Malaysia’s heavy reliance on trade, any protectionist measures that dampen world trade would not bode well for the country.
“Given the existence of value chains in the region, sometimes the incidence of a tariff can be at a different place than where it is imposed. For example, a tariff on Chinese products could hurt Thai exporters that provide intermediate goods to China. That said, the solar tariffs are likely to have a direct impact (here) as PV (photovoltaic) cells and modules comprise about 1% of Malaysia’s export. It’s not big enough to hurt the economy but it is not completely insignificant,” he added.
MIDF Research chief economist Dr Kamaruddin Mohd Nor and OCBC Bank vice-president and senior investment strategist Vasu Menon agreed that with the impending mid-term elections Trump is likely to roll out more protectionist policies to score brownie points for the Republicans.
“Almost half the US trade deficit is with China, which makes it an obvious target. Some of the imbalance reflects exports from other Asian economies that are processed in China and re-exported, so the entire region is vulnerable to US-China friction,” Vasu said.
Nomura Southeast Asia economist Brian Tan said the impact of the recent tariffs on Malaysia should be limited given that they are specific to certain products. However, it could become more harmful if tariff imposition broadens to other areas, as about 9.5% of Malaysian exports are to the US.