Tariffs won’t hurt palm oil, rubber exports
PETALING JAYA: Malaysia holds an advantage over the United States in the trade of key commodities such as palm oil and rubber, as these products are unique and supplied by only a few countries, says Plantation and Commodities Minister Datuk Seri Johari Abdul Ghani (pic).
He said the imposition of US tariffs on such commodities would have little impact on Malaysia, as exports of palm oil and rubber to the United States make up only a small portion of the country’s total global shipments.
“The US tariffs do not really affect our commodity exports, as they need our products anyway. Even if a 19% tariff is imposed, the cost will simply be passed on to their customers,” he said when asked yesterday about the impact of tariff exemptions on Malaysian exports.
On Sunday, Malaysia and the United States signed the Agreement on Reciprocal Trade during the Asean Summit, under which Malaysia secured exemptions from the 19% retaliatory tariff for 1,711 tariff lines.
Johari said Malaysia exported RM4.2bil worth of palm oil to the United States out of a total global export value of RM120bil, while rubber product exports to the US stood at RM8.3bil.
“There is no real alternative for the palm oil and rubber products we supply. If the United States doesn’t buy from us, where else can they get them? So, even with a 19% tariff, that cost would be passed back to US consumers,” he said.
He added that since all Asean countries are currently subject to the same 19% US tariff, Malaysia’s position remains competitive.
“The commodities we export to the United States are unique and difficult to replace.
“The United States is primarily a soybean market, not a palm oil market, and what they import from us are palm-oil–based products. As for rubber, our competitors also face the same tariffs,” he said.
Under the agreement, Malaysia will offer significant preferential market access for US exports, covering industrial goods such as chemicals, machinery, electrical equipment, metals and passenger vehicles, as well as agricultural products including dairy, poultry, beverages, rice and fuel ethanol.
In return, the United States will maintain a 19% tariff on Malaysian goods under Executive Order 14257 but apply zero tariffs to selected Malaysian products under a separate category for aligned partners.
The exemptions include key Malaysian exports such as palm oil, rubber products, cocoa, aircraft components and spare parts, and pharmaceuticals, which collectively account for about US$5.2bil (RM21.8bil), or 12% of total exports.