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Malaysia has warned that removing U.S. tariff exemptions on its semiconductor exports could hurt its global competitiveness and strain interconnected supply networks. The announcement came as the country revealed its budget report for the 2026 fiscal year.  Washington imposed a 19% tariff on Malaysian goods in August as part of President Donald Trump’s ongoing tariff wars. The August levy on Malaysia exempted certain products, such as semiconductor materials, which are currently being reviewed in the U.S. Malaysia’s $114 billion budget targets growth as U.S. tariffs weigh on economy According to the latest economic outlook budget report for Malaysia’s fiscal year 2026, removing the semiconductor exemptions may result in multiple challenges for the country, including reducing its competitiveness and straining sectors closely related to U.S. supply chains. The country ranks sixth globally as a semiconductor exporter to the U.S. The country hosts multinational chip assembly and testing operations that supply most U.S. chip imports.  According to a Reuters report, Malaysia’s 2026 economic outlook budget valued expenditures at $114.4 billion, a 14% increase from the 2025 revised spending. Operating expenditures received  338.2 billion ringgit, while development projects received 81 billion ringgit. Additional investments are expected from state-linked companies.  Prime Minister Ibrahim Anwar has made several policy shifts since taking office, including the removal of petrol subsidies and a minimum wage hike. He said that the subsidy removal could generate annual savings of up to 15.5 billion ringgit. He noted that this year’s fuel subsidy removal has already saved 5 billion ringgit. Malaysia has reduced its fiscal deficit to 3.5% of the GDP from 3.8% this year. Anwar also highlighted a projected 2.7% rise in revenue to 343.1 billion ringgit.  The 2026 budget also projected moderate inflation, at 1.3% to 2%, with monetary policy expected to support growth. Malaysia has also faced a…

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Filed under: News - @ October 10, 2025 3:28 pm