Federal Engagement Crucial As Penang Braces For Impact Of US Tariffs — Chow

GEORGE TOWN, July 8 (Bernama) -- The Malaysian Government must continuously engage with its United States (US) counterparts to negotiate a lower tariff rate, following Washington’s recent decision to impose a 25 per cent duty on goods from Malaysia, said Penang Chief Minister Chow Kon Yeow.

Chow said the 25 per cent tariff is expected to impact Penang's highly export-oriented economy, which is deeply integrated into global value chains.

“Furthermore, variations in tariff rates across the ASEAN region could distort trade dynamics and influence future investment decisions throughout the region.

“In light of this, there is an urgent need for the Malaysian Government to continuously engage with its US counterparts to negotiate a lower tariff rate,” he told a press conference after the launch of Penang Water Supply Corporation’s new RM5 billion Islamic Medium-Term Notes (IMTN) Programme (Sukuk Wakalah) here today.

He said attention must also be directed towards addressing non-tariff policies and trade barriers to safeguard Malaysia’s trade competitiveness.

He highlighted that between January and May 2025, Penang accounted for 55 per cent of Malaysia’s total exports to the US, valued at RM52 billion, with a substantial share of these exports originating from US multinational corporations operating in Penang, primarily shipping finished products or components back to their parent companies.

Of these, he said electrical machinery and equipment constituted 77 per cent of Penang’s exports to the US, with a large share driven by the semiconductor industry.

While semiconductors are currently exempt from the tariff, he said the broader 25 per cent imposition still poses an economic risk.

“Amidst these external headwinds, Penang will continue to work closely with the Federal Government and industry players to safeguard the nation’s economic interests.

“The state will also remain committed to enhancing infrastructure, streamlining business processes, and improving the cost of doing business to sustain its role as a vital hub in the global supply chain and ensure long-term economic resilience,” he added.

-- BERNAMA