Trump Tariffs Are About Power, Not Trade, Says Former MATRADE Chief

KUALA LUMPUR July 24 — Washington’s latest tariff offensive is less about trade than projecting American geopolitical dominance, according to Adjunct Professor Ir. Dr Mohd Shahreen Zainooreen Madros of the Universiti Kebangsaan Malaysia (UKM) Graduate School of Business.

Dr Mohd Shahreen who is also former chief executive officer of MATRADE said ASEAN’s fragmented response has also exposed the bloc’s inability to present a united front against unilateral actions by major powers.

“The imposition of tariffs by the US is a red herring because I believe the reason for it is to emphasise the dominance of the US as still the main force in global power,” Shahreen told DagangNews.

“What better way to demonstrate this than a unilateral imposition of authority without any regard for multilateralism?”

Shahreen spoke on 22 July, a day before the Trump administration finalised a new round of tariffs affecting Malaysia and 59 other economies.

Tariffs evolve with new legal basis

The latest measures are the latest stage of a tariff campaign that has shifted legal foundations several times since President Donald Trump returned to office.

Washington first introduced a 10% baseline tariff in April 2025 alongside higher country-specific rates. Malaysia’s rate was initially set at 24% before rising to 25%, then reduced to 19% under the US–Malaysia Agreement on Reciprocal Trade announced in October 2025.

After the US Supreme Court struck down the emergency powers underpinning the earlier tariffs, Washington replaced them with a temporary 10% global import surcharge under Section 122 of the Trade Act of 1974. The surcharge took effect on 24 February 2026 and expired on 24 July.

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On 23 July, President Trump instead invoked Section 301 of the Trade Act following investigations into whether 60 economies restricted imports of goods produced wholly or partly with forced labour.

Malaysia received an additional 10% Section 301 duty after committing under its reciprocal trade agreement with Washington to strengthen enforcement against forced-labour imports.

The duty applies from 24 July, with limited exemptions for goods already in transit. It is an additional Section 301 duty rather than Malaysia’s total tariff rate, while ordinary US customs duties and sector-specific tariffs may still apply.

Washington also plans tariff-rate quotas for Malaysia, Bangladesh, Cambodia and Indonesia to allow specified textile and apparel exports using American cotton or textile inputs to enter duty-free under the new Section 301 measure once the mechanism is established.

For Shahreen, the changing legal justifications reinforce a broader reality — trade policy is increasingly being used as an instrument of geopolitical power.

ASEAN divided by national interests

Shahreen said months of tariff uncertainty have failed to produce a stronger ASEAN response because member states continue prioritising their own economic ties with the United States.

“This individualistic national interest seems to be holding each member state back from taking a strong, united view against any unilateral imposition by the US,” he said.

ASEAN’s consensus-based approach makes coordinated negotiations difficult unless members accept stronger common obligations.

“You can only have a coordinated approach if there is a united voice for any negotiation.

“ASEAN’s position on this has always been soft, allowing member states to do what is best for them individually. To wait for a united voice will probably mean that it never happens.”

He said Malaysia should remain pragmatic by safeguarding its own interests while continuing to advocate a stronger collective ASEAN position.

E&E sector most exposed

Shahreen identified electrical and electronic (E&E) products, petroleum-related goods, palm oil and machinery as Malaysia’s key export sectors vulnerable to higher US tariffs.

Although multinational corporations dominate the E&E industry, the impact would extend across the broader economy.

“The unfortunate secondary impact would be a slowdown in demand due to cost increases and potential job losses if the economy slows down.

“The local supporting industries for E&E would also suffer. Ultimately, everyone loses.”

Malaysia’s trade has nevertheless remained resilient. During the first two months of 2026, exports rose 15.2% to RM277.78 billion, while trade with the United States increased 15.7%. Exports to the US surged 38.1%, according to MATRADE.

Shahreen believes part of this growth reflects temporary supply-chain adjustments as companies diversify away from China.

“Malaysia and some others have benefited from this. But this cannot last long.

“I believe it is just a temporary adjustment before the real impact of tariff hikes affects everyone.”

Temporary gains, long-term challenges

Malaysia could continue attracting investment and manufacturing relocated from China, particularly by companies seeking alternative production bases.

“From an opportunistic point of view, there is always something to be gained from a conflict,” Shahreen said.

However, he cautioned that relocation driven by geopolitics should not be mistaken for sustainable economic progress. If China continues leading in advanced technology and innovation, shifting supporting industries elsewhere alone will not contain its long-term rise.

“It is always best for developing nations to hedge their support wisely. What matters is real progress, not an artificial imposition based on historical powers trying to hold their ground.”

Focus on competitiveness

On tighter US scrutiny over rules of origin, transshipment and Chinese content, Shahreen said Malaysian ministries and trade associations have been engaging US authorities while helping exporters diversify into new markets.

However, businesses cannot fully prepare for constantly evolving requirements.

“One can never be fully prepared for constantly changing requirements. This will require continued cooperation between the authorities and industry players.”

Drawing on his experience leading MATRADE, Shahreen said government support should prioritise industries with long-term strategic value and strong employment potential.

“While we as a nation navigate through the turmoil of global geopolitics, we must always remember that our real strength is based on what value we have to offer.

“Short-term compromises must never be misunderstood as replacing the need to continuously develop our capabilities.”

He added that Malaysia must continue building skilled employment in high-technology industries while ASEAN strengthens intra-regional trade and develops an integrated industrial value chain supported by better transport, telecommunications and energy infrastructure.

“ASEAN needs to develop and use its own internal market to become stronger against the world’s growing geopolitical pressures.”

For Malaysia, he said, tariff negotiations may provide temporary breathing space, but lasting resilience will depend on stronger domestic capabilities, technological advancement and deeper regional integration. As Shahreen concluded: “Our real strength is based on what value we have to offer.” - DagangNews.com