“The manufacturing sector, a major contributor to Malaysia’s tax revenue, is currently under severe cost pressures,” Soh Thian Lai, president of the Federation of Malaysian Manufacturers (FMM), said in a statement yesterday.

The tariff decision “is especially troubling given Malaysia’s strong trade relationship with the US and our long-standing commitment to open and fair trade,” he said.

A planned expansion of Malaysia’s sales and service tax in May and an increase in electricity tariffs in July will “significantly raise compliance and operational costs for mid-tier and large manufacturers,” he added.

Malaysian exporters are likely to suffer from squeezed profit margins from the tariffs as they may face pressure from US importers to reduce export prices, according to FMM.

President Donald Trump announced this week he will apply at least a 10% tariff on all exports to the US, with even higher duties on some 60 nations, to counter large trade imbalances.

The Malaysian government views the tariffs seriously and is not considering retaliatory measures, according to the investment, trade and industry ministry in a separate statement yesterday.

Malaysian prime minister Anwar Ibrahim was reported by local media as saying that a special Cabinet meeting will be held today to discuss the tariffs and measures to deal with the impact.