2 EVENTS THAT WILL IMPACT TRADE
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”.