The DAP national chairman said tariffs posed a threat to sustainable economic growth and could cause global inflation, as seen during the Covid-19 pandemic.

He said that while Malaysia was not directly targeted by Trump’s tariffs, the country would still face indirect repercussions.

Noting that China had been Malaysia’s largest trading partner for the past 15 years, Lim said any negative impact on China’s economy would inevitably affect Malaysia.

“China supplies materials and components in the most efficient and cost-effective manner for Malaysia’s electronics hub,” he said.

“Any increase in costs will disrupt the supply chain and reduce production output.”

Trump had said that Canadian and Mexican exports to the US would face a 25% tariff from Tuesday, while goods from China, which already face various rates of duties, would see an additional 10% tariff.

To mitigate the potential impact of Trump’s tariffs, Lim proposed several financial and tax adjustments aimed at reducing business costs, particularly for SMEs.

He urged the government to delay the implementation of the luxury tax and postpone targeted subsidies for RON95 to avoid floating its price on the market, which could trigger inflation and increase transportation costs.

He also proposed raising the taxable income threshold for the 15% tax rate from RM150,000 to RM300,000, and adjusting the next threshold for the 17% rate from RM600,000 to RM700,000, which he said would allow SMEs to save up to RM10,000 annually.

Last month, foreign minister Mohamad Hasan said the Cabinet would discuss how Trump’s plans to impose tariffs on goods imported into the US might affect the Malaysian economy.

He noted that Malaysia and the US are significant trading partners, with Malaysia a key electrical and electronic goods exporter to the country.