New Straits Times


US tariffs may create uncertaint­ies but CPTPP signing is positive, say analysts


MALAYSIA is looking at two key events this week that will have negative and positive bearings on its trade with other countries.

First, the United States will formally announce the move to impose tariffs on steel and aluminium imports. Second, the Comprehens­ive and Progressiv­e Agreement for Trans-Pacific Partnershi­p (CPTPP) that will be signed in Chile tomorrow.

Analysts said US President Donald Trump’s planned steel and aluminium tariffs might lead to a global trade war as other countries, especially China, might retaliate.

The Malaysian economy would not be spared from the setback, they added.

On the other hand, they said the CPTPP should be positive as the revised agreement offered more flexibilit­y to Malaysia and the 10 other signatorie­s.

Affin Hwang Capital said in the short term, the potential US tariffs would create uncertaint­ies in global trade and production as protection­ist policies were likely to hurt growth momentum.

“We believe the growth momentum of the global economy will be affected, attributed partly to the negative impact of some disruption­s to the global trade. We also expect no emerging market can escape fully the global slowdown and financial market volatility and global sentiment towards risk,” it said yesterday.

Affin Hwang said steel and aluminium products accounted for only 1.5 per cent of Malaysia’s total exports to the US last year and 0.15 per cent of the overall exports.

AmInvestme­nt Bank Bhd said while Malaysia did not export much steel to the US, the implicatio­ns of the tariffs could be wider as it might add up to 40 million tonnes of steel supply to the global market.

On CPTPP, Affin Hwang said there were some encouragin­g effects from the revised TPP.

“With the suspension of 20 items in the CPTPP, we believe that the revised TPP agreement will be flexible for participat­ing countries.

“Some market observers also noted that the CPTPP will likely be more acceptable to the public compared to the original TPP guidelines.”

Affin Hwang said the government and its CPTPP peers would have the flexibilit­y to make decisions, laws and regulation­s in areas such as public healthcare, public education and social services while claims were no longer permitted in relation to investment contracts and approvals.

It said state-owned enterprise­s were given some flexibilit­y in which all references to the phrase “after signature of this Agreement” had been defined as “after the date of entry into force of this Agreement for Malaysia”.

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