Samenta says even 10pc US tariff inflicts severe strain on local exporters

KUALA LUMPUR, July 24 — The Small and Medium Enterprises Association of Malaysia (Samenta) is calling for targeted relief measures for local exporters, warning that the newly implemented 10 per cent US tariff inflicts an immediate operational strain on SMEs.

While the Ministry of Investment, Trade and Industry (Miti) highlighted that Malaysia secured a comparatively favourable rate compared to the 12.5 per cent imposed on several regional peers, Samenta argues that this distinction offers little comfort to small businesses.

The association stressed that the tariff acts as a sovereign-level regulatory penalty tied to national enforcement gaps, meaning compliant SMEs that have invested heavily in international labour and ESG standards are now collateral damage in a broader trade war.

The crisis is particularly acute for micro, small, and medium enterprise (MSME) exporters who operate on razor-thin margins as suppliers within global value chains.

Samenta warned that these businesses now face a brutal choice: absorb the new duty and cripple their own cash flow, or raise prices and risk losing US buyers to competitors. The association identified downstream manufacturing, precision engineering, furniture, wood processing, and light electronics as the sectors most exposed to this pressure.

To cushion the blow, Samenta is urging SMEs to pivot away from an over-reliance on the US market. The association suggests leveraging existing regional trade agreements, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP), to tap into growth markets across East Asia, Australasia, and the Middle East.

To facilitate this shift, Samenta has called on Miti and Matrade to introduce dedicated export diversification matching grants. These would help SMEs cover the steep costs of market entry and certification in alternative regions. Additionally, the group is pushing for audit co-funding to support businesses in maintaining the rigorous labour compliance documentation required by global buyers.

Samenta also proposed the nationwide adoption of its Circular Economy Certification (CEC), the first of its kind in Asean. The group argues that adopting circular economy practices can lower resource dependency and cut energy costs, thereby strengthening the ESG credentials of SMEs against tightening global standards.

Looking toward a permanent solution, Samenta asserted that the most critical step for Malaysia to exit the USTR’s Section 301 list is the expedited creation of a national legislative framework governing third-country import prohibitions tied to forced labour. Closing this regulatory gap is seen as the only way to remove the underpinning of the current tariff.

Earlier, Miti confirmed that a second Section 301 probe into “excess capacity” remains ongoing, covering 16 economies including Malaysia.