The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) has conducted a quick take survey (QTS) to assess how businesses and companies are preparing for the US reciprocal tariffs. It provides a focused snapshot of a company’s preparedness, supply chain strategies, and anticipated financial impacts. The pulse survey was conducted during 7-10 April 2025, garnering 192 responses.

1. Financial Impact and Action Plans
Overall, the survey results showed that 55.2% of total respondents indicated that the tariffs will have direct and indirect impact on businesses. About 47%-50% indicating between “high and very high impact” and a significant percentage of them (60.4%) are pessimistic about their business prospects.

More than half of total exporting respondents reported their businesses export to the US market, with 63.2% indicating more than 20% of their sales coming from the US. Other major export destinations are ASEAN (58.3% of respondents), Europe (34.0%), Middle-East (33.0%) and China (20.4%).

When faced with tariff increases and expected reduced demand, 61.3% of businesses indicated that their sales will be impacted should the tariff increase more than 10%. Tariff increases can significantly impact product competitiveness, with 31.1% of respondents indicated their product’s selling price will not be competitive compared to competitors. The extent of the impact depends on the price elasticity of demand, the substitutability of the affected products, reconfiguration of supply chains and production.

Additionally, 46.2% of businesses indicated that their customers request for a reduction in prices to offset the tariff increases. Some are negotiating with the buyers to co-sharing the tariff, especially with their loyal customers, resulting in a squeeze in profit margin. These findings highlight the substantial financial risks faced by the businesses, which can manifest in various forms, including market fluctuations, potential non-payment from customers, cash flow issues, and operational challenges.

Businesses are strategizing to cope with the tariffs, with 91.5% of total respondents have plans to mitigate the tariffs impact. Almost 60% of the respondents will focus on reducing operational costs, sourcing alternative markets (56.7%) and diversifying supplier base (35.1%), deferring or cancelling investment plans (42.3%) until there is more clarity on the tariffs. Businesses also reported that they will pass on increased costs to consumers.

2. Government’s Supports for Businesses in Navigating the Tariffs Impact
The Government can consider to provide financial assistance such as grants, subsidies and tax breaks for SMEs and exporters to offset increased costs, help to manage cash flows and sustain their business operations. The establishment of emergency relief funds with low-interest rate something like Special Relief Facility (SRF) for SMEs, including loans R&R (restructuring and rescheduling) if the producers/suppliers face financial difficulties to service their loans due to reduced sales.

The setting up of a centralized unit to provide clear guidance on better understanding of the tariffs, including real time and accurate updates on tariff regulations and trade policies. The trade agencies can work together with the business associations and chambers to support market diversification, find alternative suppliers and offer supply chain solutions as well as encouraging domestic trade and production. These include the enhancement of the Market Development Grant (MDG) to assist exporters in their efforts to promote Malaysian made products or services globally.

Overall, President of ACCCIM Datuk Ng Yih Pyng said that the biggest risk for businesses is the tariffs uncertainty. While Malaysia is imposed with a universal 10% tariff for now and a 90-day tariffs pause for allowing trade negotiations provide a reprieve, no clarity is expected until July when the tariff reversal is scheduled to end.

Datuk Ng hopes that Malaysia’s soft diplomatic approach towards engaging with the US to discuss the 24% tariff on the Malaysian goods would reach a balanced and mutually beneficial trade deal given a strong and longstanding bilateral trade and investments between two countries.

The ACCCIM has formed a task force to gather relevant feedback from our members and associate members on the tariffs implication so as to share it with the government, and continue to working collaboratively with the Government in developing strategies to mitigate the impact of tariffs on SMEs. We will monitor the US’s tariffs policy development closely, and will continue to look at the issues that impact businesses.

President Datuk Ng urges the Government to put on hold any changes in domestic policies that would add cost pressures on businesses and dampen businesses and consumers’ sentiments in this highly uncertain environment. These include a wider scope of the SST, the RON95 fuel subsidies rationalization, proposed hike in electricity tariff and a multi-tiered levy. ACCCIM believes that Bank Negara Malaysia will consider to cut interest rate should the negative spillover effects of the trade war escalation threatens domestic demand. A reduction in interest rates would ease loan servicing payments.

In light of the intensified trade conflicts stemming from the reciprocal tariffs, the government should consider implementing regulatory measures, such as anti-dumping policies and stricter enforcement, particularly at the points of entry, to stem the flooding of goods to our market.