The stock markets and commodity markets seem to be panicking in different directions. The Dow Jones has lost over 3,000 points. They did not react so badly in the beginning but yesterday (Monday) was panic buttons. The London market went down but has recovered some.
The very good news is that oil has gone below US$60 a barrel.
Food commodity prices are crashing and interest rates are coming down.
How can that be bad news?
This is the best news we have heard maybe in the last 10 years.
- The really bad news is petrol prices are not coming down in Malaysia.
- Mr Bank Negara governor is not cutting the interest rates.
- Food prices in Malaysia are not coming down.
- Beras Putih Tempatan is still not available in quantities in the country.
Ok now we move into the Twilight Zone.
Where did US get 24pc tariff from? Tengku Zafrul says actual import duties average only 5.6pc | Malay Mail
That is a very good question. Please ask the Americans to show how they got that 47%. By the same token can Zafrul show the details of how he got that 5.6% “import duties”? And please show the full picture because “import duties” may not include excise duties, levies, surcharges, other taxes, the infamous APs plus other ‘non-financial’ tariffs like quotas etc. All these add to the costs of imports.
Here is something I received from someone, thank you. It is an approximate calculation of the “tariffs” on imported American motorcycles.
Tax calculation for imported motorcycles in Malaysia
Key Taxes:
- Import Duty: rate varies depending on the engine capacity.
- above 500cc, import duty is 30% for Most Favored Nation (MFN) countries
- 5% for ASEAN CEPT countries.
- Excise Duty – 30% for all engine capacities.
- Sales Tax: 10% sales tax for imported motorcycles with above 250cc.
Applying the Taxes to a 1300cc American motorcycle
* Import Duty: 30% (assuming MFN status)
* Excise Duty: 30%
* Sales Tax: 10%
Calculating the Total Tax:
* Let’s assume the motorcycle’s cost is USD 20,000 (RM90,000.00)
* Calculation.
* Import duty: US$20,000 * 30% = US$6,000
* The value after import duty is added is $20,000 + $6,000 = US$26,000.
* Excise duty: $26,000 * 30% = US$7,800
* The value after excise duty is added is $26,000 + $7,800 = US$33,800.
* Sales tax: $33,800 * 10% = US$3,380.
* Total taxes = $6,000 + $7,800 + $3,380 = US$17,180.
* Total cost in Malaysia $33,800 + $3,380 = US$37,180 (RM167,000.00)
Approximate total tax on a USD 20,000 (RM90,000), 1300cc motorbike imported into Malaysia would be US$17,180. Therefore the total cost of the motorcycle in Malaysia would be approximately US$37,180 (RM167,000.00).
- Ok folks this is an approximate calculation. I believe a couple of things are not included – the profit margins for the importers (usually those quota mafia or GLC mafia) and the profit margins for the dealers.
- Also if there are APs involved, especially “third party” APs, then there will be even more costs.
- The ultimate selling price of the American motorcycle to the Malaysian consumer will be much more than RM166,000.
So an imported American motorbike (1,300 cc) that costs US$20000 (RM90,000) CIF imported into Malaysia ends up being sold to the Malaysian consumer for more than US$37,180 (RM166,000).
- From RM90,000 to RM166,000 is an 86% jump (based on taxes and duties alone)
- That is more than 47%.
- That is definitely not 5.6%.
- So can Zafrul please explain how he got his 5.6%?
Here is another, even more simpler comparison. This is the Ford Mustang car.
- In Rancho, California this car starts at US$31,920 or RM143,000.
- At that price I would like to buy two of these beauties.
Does anyone want to guess what was the selling price of this car in Malaysia (I read somewhere they are not bringing in anymore of these cars from the US).
In Malaysia the price of the Ford Mustang was : RM461,000 to RM600,000 !!!
That is over 300% more than the selling price in the US.
- Hello Zafrul, please do not klentong.
- 300% is more than 47%.
- That is definitely not 5.6%.
Here is more news:
- Malaysia to lead Asean response to US tariffs.
- will submit comprehensive impact assessment
- to prepare joint regional response
Malaysia will lead ASEAN’s response? Really?
Dulu Obama kata TPPA hang kata TPPA.
Lepas tu Trump kata no TPPA hang kata no TPPA.
Dulu Biden kata global warming hang kata global warming.
Lepas tu Trump kata global cooling, hang kata global cooling.
Sekarang Trump kata tariff, hang nak kata apa pula?
And the latest news is : Top Trump administration officials said Sunday that more than 50 countries have reached out to the White House, ready to negotiate the terms of tariffs expected to hit their respective countries. Vietnam, Cambodia, Indonesia, Italy, Lesotho and South Africa have expressed a willingness to work with the Trump administration.
Err..excuse me but arent Vietnam, Cambodia, Indonesia ASEAN countries already? And Singapore says they will not retaliate. So if Vietnam, Cambodia and Indonesia are already talking to the US about the tariffs and Singapore “will not retaliate” then exactly what “joint regional response” are you talking about? Please do not klentong.
One person said, “First time I see his response. What
stupid heck does the imbecile mean by ‘reciprocal’? Doesn’t the moron
mean ‘unilateral’ “?
- So what exactly are they going to tell the Americans?
- Our tariffs on your motorbikes are NOT 47% !!
- They are 86% or more.
- Our tariffs on your Ford Mustang cars are NOT 47% !!
- They are 300% or more.
Is this what they are going to tell the Americans?
I listened to the Singapore PM’s statement on the US tariffs. He says Singapore must be mentally prepared. Mentally prepared for what? Its a tariff. You have to deal with it. Then he said Singapore will not retaliate. What is there for Singapore to retaliate? The US tariffs on Singapore are only 10%. Thats like covering admin costs. Its not much of a tariff at all.
But let me tell you what will happen. Because this has happened before. In the 1990s the US had this thing called the GSP (Generalised System of Preferences). Certain countries were given GSP status. It meant that they did not have to pay any tariffs to export to the US market. But it was restricted to certain industries etc. Vietnam and Cambodia were once beneficiaries of the American GSP. Cambodian textile exports to the USA ‘enjoyed’ zero tariffs. So what happened was that many textile manufacturers (especially from Malaysia) set up their factories in Cambodia and Vietnam. This included some of my corporate clients at Maybank where I was working at that time. They wanted to take advantage of Cambodia and Vietnam’s tariff free GSP status.
I think history will repeat itself. I think this is what is going to happen in Singapore soon. Malaysian exporters will send their products to Singapore and then repackage, rebrand, re-entrepot their goods out again from Singapore to the USA as ‘Made in Singapore, country of origin Singapore’ etc. Then they will only incur 10% tariffs. So Malaysia will not lose much – perhaps port services, shipping services, processing services plus ‘commissions’ payable to Singapore handlers. But Singapore will become richer.
Recall that years ago there was some controversy that Singapore was exporting much more tin (to the world markets) than they were buying from Malaysia (their ‘largest’ supplier). Then it was found out that more tin from Malaysia was being smuggled into Singapore than the official figures suggested. The Singaporeans are always ‘mentally prepared‘.
Lets add some background. Donald Trump’s tariff plan is the brainchild of two main people. Howard Lutnick is the present US Secretary of Commerce. Lutnick is a billionaire businessman who made his billion in investment and fund management.
The other person is US Secretary of the Treasury Scott Bessent (also a billionaire) who was an investor and hedge fund manager. (He made his money working for George Soros). Scott Bessent studied at Yale University and also taught “economic history of the United States” for five years at Yale. He represents the theoretical reasoning behind the tariffs idea. This is the guy behind the details of the tariff policy.
Are tariffs good or bad? India claims to be the fourth or third largest economy in the world. Is that because they impose very high tariffs and barriers on almost all imports? China too has significant tariff barriers against imports. Yet China is the world’s largest economy (they say by PPP but I think even in nominal terms – as usual many things about China are understated). So it looks like high tariffs have been good for China and India. What about the United States? If high tariffs are good for China and India (and Malaysia) will high tariffs not be good for the US?
Mr Trump is quite focussed. He points out that the US has a US$1.0 Trillion trade deficit with China alone. That is US$1.0 TRILLION! Plus the US has trade deficits in excess of US$1.0 billion with many other countries. One guy says the US has not had a trade surplus since 1975 – FIFTY YEARS AGO.
The US has a huge trade deficit, they have the highest national debt in the world ie US$36.0 TRILLION. What does this mean? It means the US has been funding the rest-of-the-world’s prosperity but to their own detriment. Donald Trump says this cannot go on. The US is technically bankrupt.
We cannot have China, US or even Thailand’s economy tanking. That would be disastrous for the entire world. Even the floods in Thailand (some years ago) totally disrupted global supply chains in the world automotive industry. Because Thailand is such a huge player in the manufacture of cars, SUVs, engines, parts etc. The world cannot have China or the US economies run into serious trouble. We will all suffer.
More than tariffs, what the Americans want is fair trade. If you tax my products fine. Then I will also tax your products. ‘Tit for tat butter for fat. You kill my dog, I kill your cat’.
What is so difficult to understand. And many countries are beginning to understand.
About 50 countries have already contacted US officials to discuss the tariffs issue (including ASEAN countries Indonesia, Vietnam, Cambodia and I am quite certain Singapore). They want to reach a settlement with the US.
The settlement will be very simple. Lower your tariffs – both financial and non-financial tariffs. Other than actual tax percentages other non-financial ‘trade barriers’ like licenses, quotas, too strict “quality controls” will all be factored in.
Donald Trump says that in Europe they drop a bowling ball from 20 feet up on American cars and see if there is a dent. Of course there will be a dent. Then the American cars are rejected as ‘unsafe’. These are unfair trade practises. All this has to stop.
How will this affect Malaysia? I think it will affect us plenty. Here is Yamin Vong in The Star:
- uncomfortable truth that Malaysia’s small-scale local assembly is sustained only by burdening car buyers with high prices
- US tariff policy affect Malaysia’s automotive market
- US singling out AP system, as a discriminatory non-tariff barrier.
- Malaysia must review its national automotive policy
- reality that Malaysia’s auto industry cannot go beyond local assembly
- low volume of Malaysian auto industry
- don’t see any improvement in Malaysia’s automotive industry
- Thailand, Indonesia eclipsed Malaysia as automotive powerhouses
- Chinese EV-makers reshaping global automotive supply chains
- M’sia’s small-scale local assembly sustained by burdening people with high prices
- Malaysia’s automotive sector long relied on tariffs, excise taxes
- Malaysia’s market remains small and fragmented
- Malaysia’s protectionist policies out of step.
- Our policy framework remains timid
- Malaysia new excise duty 10% – 30% on locally-assembled cars in 2026
My Comments : I have only thing to say about our automotive policy – it is totally brainless. May I suggest that the gomen go and regulate (licenses and APs, excise and taxes and duties) the keropok lekor market? You may have better luck there.
For decades now the poor Malaysian consumer has been paying among the highest prices in the world for tin can cars.
If you want to buy a foreign car go ahead. But you must be prepared to pay RM460,000 for a Mustang that only costs the American consumer RM143,000. And it cascades down from there. Every car in Malaysia suffers a much higher price because of the tariffs and duties, excise and taxes and bla bla.
Maybe Donald Trump’s reciprocal tariffs will crack open this wicked and unjust system that they have burdened us with.
There are also other blood sucking sectors like banking – which are equally “controlled”. All this must be broken up.
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