By Dr Mohd Safar Hasim, Malaysian Press Institute (MPI)
As Malaysia prepares to host President Donald Trump during the ASEAN Summit, anticipation builds around discussions on trade and tariffs.
Trump tariff doctrine is reshaping global commerce and challenging norms. For Malaysian policymakers and civic observers, understanding the logic and consequences of Trump’s approach is essential—not only to interpret its impact, but to craft a strategic response.
Trump frames his tariff doctrine around three commanding ideas: revenue, sovereignty, and leverage. He calls it a “Liberation Day” for the American economy—a moment when the United States stopped being exploited and began reclaiming its industrial destiny.
Through sweeping import duties, Trump claims to be enriching the nation, restoring control over supply chains, and forcing foreign governments to negotiate on America’s terms.
Revenue: Making Others “Pay”
Trump’s first justification is fiscal. By August 2025, the U.S. had collected over $130 billion in tariff revenue—more than double the previous year. The administration touts this as proof that America is enriching itself rather than subsidising foreign competitors.
However, economists point out that tariffs are paid by importers, not foreign governments. The cost is passed on to U.S. consumers and businesses through higher prices.
Analysts estimate an average burden of US$950–US$1,300 per household, especially in tariff-sensitive categories like furniture, electronics, and food. The revenue is real—but it’s coming from American pockets.
Sovereignty: Reclaiming Economic Control
Trump’s second pillar is sovereignty. He argues that decades of globalisation have eroded America’s control over its economy. By imposing tariffs, he claims to be restoring national independence—especially in strategic sectors like pharmaceuticals, electronics, and heavy industry.
This narrative resonates with voters who feel left behind by offshoring and deindustrialisation.
Tariffs are portrayed not just as economic tools, but as patriotic acts. Yet the U.S. remains embedded in global supply chains, and sudden tariff shocks can disrupt production, raise costs, and strain industries reliant on imports.
Leverage: Forcing Concessions and Reshoring
The third pillar is leverage. Trump uses tariffs as bargaining chips to pressure trading partners into concessions. Countries like Japan, South Korea, and the EU have negotiated exemptions in exchange for reciprocal trade terms. The administration also uses tariffs to force U.S. companies to reshore—relocate production back to American soil.
This strategy is most visible in the pharmaceutical sector. A 100% tariff applies to patented and branded drugs unless the manufacturer is actively building U.S. facilities. Generic drugs are exempt, and EU-origin brand-name drugs face lower rates under separate deals.
Other sectors targeted for reshoring include heavy trucks (25% tariff), cabinets and vanities (50%), and upholstered furniture (30%). These industries have long relied on imports from China, Mexico, and Southeast Asia. The tariffs aim to disrupt supply chains and rebuild domestic capacity.
However, reshoring is slow and costly. Building factories, training workers, and securing permits takes time. In the short term, companies face higher costs and disruptions. Some have begun investing in U.S. facilities to qualify for exemptions, but others warn the policy may backfire if domestic production cannot scale quickly enough.
Trump’s Assertion of Strength—and the Limits of Unilateralism
Trump’s tariff doctrine is rooted in the belief that the U.S. can act from a position of strength—that it can impose tariffs unilaterally, and other countries will not or cannot retaliate. He often speaks as though America is immune to global consequences, and that others must accept its terms.
But this overlooks a fundamental truth: other countries have their own strengths. China, the EU, ASEAN members, and Latin American exporters all possess leverage—through market access, resource control, or alternative trade alliances.
Trump’s approach also disregards the theory of international trade, which emphasizes mutual benefit, comparative advantage, and interdependence.
Most critically, Trump appears to forget that the U.S. depends on other countries for essential products. One example is rare earth elements (REE)—the backbone of modern electronics, clean
energy, and defence technologies. The U.S. does not produce or refine enough REEs domestically to meet its needs. China, by contrast, controls over 90% of global REE processing.
Rare Earth Elements: Strategic Leverage and Vulnerability
Trump’s tariff policy initially included REEs, but they were later exempted under Annex II of the White House’s framework—revealing both strategic intent and vulnerability. The exemption underscores a key reality: the U.S. cannot afford to disrupt REE imports without jeopardising its technological ambitions.
China responded swiftly. On April 4, 2025, it imposed export controls on seven rare earth elements and permanent magnets, triggering supply disruptions across the U.S., EU, and Japan. U.S. automakers, including Ford, reported production pauses due to shortages. A 90-day truce was reached in Switzerland, and a final deal restored REE flows—but the episode highlighted the fragility of global supply chains and the importance of resource access.
Trump’s assertion of strength met a hard limit: the U.S. could not afford to lose access to REEs, and China knew it. This episode illustrates the danger of ignoring interdependence in a globalised economy.
Consequences: Inflation, Market Volatility, and Export Losses
The economic fallout from Trump’s Liberation Day tariffs has been immediate and far-reaching.
Inflation has surged, particularly in tariff-sensitive categories. By August 2025, the U.S. core Consumer Price Index (CPI) had climbed to 3.1% year-over-year, straining household budgets.
Financial markets responded with sharp volatility. The April 2 announcement triggered the worst two-day stock market drop in U.S. history, erasing more than US$6.6 trillion in value.
On the trade front, export losses have mounted. Countries like China have redirected purchases away from American suppliers, opting instead for alternatives such as Brazilian soybeans—undermining U.S. agricultural exports and weakening competitiveness.
Meanwhile, job strain is evident across key industries. Farmers, manufacturers, and equipment makers face weaker demand and rising costs. Sales of agricultural machinery have slumped, and in some regions, crops have been left unharvested due to poor market conditions.
How Should Malaysia Respond?
Malaysia must approach Trump’s tariff doctrine with clarity and collective strength. First, it should reinforce ASEAN’s commitment to multilateral trade norms, resisting pressure to accept bilateral deals that undermine regional cohesion.
Second, Malaysia should diversify its export markets and strengthen intra-ASEAN supply chains to reduce vulnerability to U.S. tariff shocks.
Third, Malaysia must leverage its strategic position in electronics, palm oil, and halal pharmaceuticals to negotiate from a position of value—not submission. Engagement with U.S. counterparts should be firm but constructive, emphasising mutual benefit and long-term stability.
Finally, Malaysia should invest in rare earth partnerships with Australia and regional allies to reduce dependence on volatile global sources.
Trump’s tariff doctrine may be unilateral, but Malaysia’s response must be collaborative, resilient, and grounded in economic realism.
Conclusion: A Doctrine of Strength, Shadowed by Strain
Trump’s tariff doctrine is bold, symbolic, and disruptive. It delivers revenue and reshoring incentives, and reasserts America’s negotiating posture.
But it also imposes real costs—on consumers, producers, and the broader economy. Inflation, export diversion, and market instability aren’t side effects; they are structural consequences.
Malaysia must weigh both the symbolism and substance of Trump’s tariff doctrine. A more sustainable path lies in strategic diversification, regional solidarity, and principled negotiation—protecting Malaysia’s interests in a shifting global landscape.
The views expressed here are entirely those of the writer
WE