Malaysia is assessing potential impacts of US semiconductor tariffs on local companies. The US faces record trade deficits exacerbated by recent tariffs against Mexico, Canada, and China, leading to market instability. Trade tensions prompt Canada and Mexico to contemplate retaliatory measures, affecting supply chains and pricing in industries like tequila.
Malaysia is currently exploring options with domestic semiconductor companies to evaluate their capacity to manage the potential impact of impending US tariffs on chip imports. This inquiry is part of the country’s strategy to safeguard its export-oriented economy from disruptions that might arise due to external trade pressures.
The escalation of trade tensions began when former President Donald Trump implemented a 25% tariff on Mexico and Canada and increased tariffs on Chinese imports, prompting retaliatory measures from those nations and causing global market instability. Trump’s assertion of the need for reciprocal tariffs reflects his stance that the US has been unfairly treated in international trade.
February’s trade report indicated that the US recorded a staggering goods and services deficit of $131.4 billion, which surged due to a dramatic increase in imports amid a slight rise in exports. This deficit marked an escalation of nearly 96.5% year-over-year, raising concerns about the sustainability of the US trade balance and its implications for economic policies.
Investors reacted negatively to these developments, with US stocks witnessing declines and European markets following suit due to fears of tariffs exacerbating inflation and stunting economic growth. Central banks, like the European Central Bank, are responding to these pressures by adjusting interest rates in hopes of propping up their economies.
In light of these ongoing tariff measures, both Canada and Mexico have voiced their discontent, with Canadian officials indicating a lack of willingness to remove their retaliatory tariffs without the cessation of US tariffs. Trade discussions are also ongoing, with Intel and GM affirming compliance with trade agreements to potentially exempt their sectors from the tariffs.
Additionally, US President Trump’s decision to impose tariffs has started to affect supply chains, specifically in the Mexican tequila industry which relies heavily on exports to the US. Concerns have surfaced regarding price increases for tequila, which could lead consumers to seek alternatives.
The article highlights the complexity of the evolving trade landscape due to US tariffs, particularly the proactive measures taken by Malaysia to mitigate risks in the semiconductor sector. It notes significant trade deficits in the US and the impact of tariffs on global markets, investor sentiment, and industries reliant on exports. Furthermore, the tensions between the US and its neighbors suggest a continuing strain on international trading relationships, prompting strategic reassessments.
Original Source: www.livemint.com
