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Between the US Supreme Court ruling deeming tariffs ‘unconstitutional’ and the recent 10 percent tariff announcement, the global economy heads for another year of uncertainty. Nailah Huda speaks with Dr Deborah Elms and Dr Juita Mohamad to understand what this means for Southeast Asia.
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00:07This is Awani Global with me, Nailah Huda, and this week we take a close look at the fresh
00:12wave of US tariffs with a temporary 10% global import tariffs announced on Tuesday while
00:19President Donald Trump pledges to increase it up to potentially 15% over the weekend.
00:24This is following, of course, the US Supreme Court ruling last week which deemed many of
00:29Trump's initial tariffs unconstitutional.
00:32In this episode, we want to unpack what this all means for the global economic uncertainty
00:38and particularly looking at this part of the world and Malaysia.
00:43And joining us to unpack some of these concerns surrounding the new wave of tariffs, we have
00:48joining us Dr. Deborah Elms, Head of Trade Policy at the Hinwick Foundation in Singapore.
00:53Thank you so much, Deborah, for joining us again.
00:56I believe the last time I spoke with you, that was the first wave of tariffs sometime
01:01last year.
01:03And here we are again.
01:05Just some of your overall thoughts on what's been happening lately and whether we can expect
01:112025 to happen again this year.
01:15I think we may look back with fondness, actually, on 2025 as a relatively stable period compared
01:22to what I expect to happen in 2026.
01:25Not that I want to panic everyone in February, but I do think that this is going to be a
01:31very
01:31turbulent year vis-a-vis trade with the United States.
01:34That's partly because, as you just mentioned, Donald Trump's initial tool that he used to impose
01:42tariffs on most of the globe was declared unconstitutional.
01:45He has instead reached for an alternative very old tool that is temporary.
01:51So it is now in place for up to 150 days.
01:55And in the interim, they're going to be shifting tariffs to at least two other types of trade
02:02tools.
02:03That means that, again, we have this sort of temporary period and we will head towards a higher
02:09tariff world ahead, but we don't know when.
02:12We don't know what sectors might be covered.
02:15We don't know which countries might be covered by these new rules.
02:19And so we actually don't have nearly as much clarity going forward as I think people had
02:25hoped when they were watching the Supreme Court case on his past tariff policies.
02:32We'll look a lot closer at some of the impact on how the world has been responding to this.
02:37But talking about the U.S. Supreme Court ruling, do you think that this has been a sort of effective
02:42means of check and balance on Trump's tariff announcements, the back and forth?
02:48Well, I think it is very heartening, frankly, that the Supreme Court ruled against the president.
02:55It seemed quite clear to me that these tariffs that he was using was really stretching this
03:01legal tool entirely too far.
03:04He had already lost three previous court cases before the Supreme Court, the highest court in
03:10the United States, took up the case.
03:11And so I think it was it made sense that the Supreme Court overturned the use of this Emergency
03:17Powers Act for tariffs.
03:20I think that's very heartening.
03:22I think it has at least led the president to stop using this tool, IEPA, for the purpose of using
03:29tariffs.
03:30And there was some question about whether the Supreme Court would overturn the president.
03:34And if so, would the president follow the legal authority in this case?
03:38And both of those happily seem to be yes.
03:41But now, again, we're in this interesting period where the use of other tools, which may or may
03:48not be legal, are now on the table.
03:50And again, the turbulence in 2026, I think, is going to continue despite the positive news,
03:57in my view, that came out of the Supreme Court last week.
04:00So what have been some of the more immediate impact that we've been able to see in the
04:05U.S. as well as around the world in the global economy at large?
04:09Well, the tariffs for the United States on imports into the United States had been at roughly
04:162 percent before Donald Trump took office about a year ago.
04:19Those then escalated to almost 17 percent, depending on who's counting.
04:26And now, as of today, we are back at 10 percent, roughly, by global standards.
04:34So I think that you can see the changing tariff policies over the last few months.
04:39And that, I think, is unusual.
04:42That has led, no surprise, to changing patterns of trade, because you've had tariffs, again,
04:47go from 2 to 16 and back down to 10.
04:51That has led companies to source differently or to not send things to the United States
04:56or to send products to the United States from manufacturing locations that were different.
05:01And so we have seen trade disruption over the last year or so.
05:05And I expect that that will continue.
05:08No surprise, prior to that, we hadn't had a lot of conversation about tariffs.
05:12And now, suddenly, you know, tariffs are on everybody's agenda.
05:17What do you think is the likely impact on ongoing trade deals?
05:21We know there's a lot that's being negotiated between the U.S. and the European Union, for instance.
05:26What's going to happen then?
05:28Well, the United States is trying to argue that the trade deals that they have signed somewhere,
05:34we have a variety of these.
05:36Some of them are just at the framework stage.
05:38Some of them are interim agreements.
05:39Some of them, like the one the United States signed with Malaysia, is assumed to be a final agreement.
05:45So this range of deals all have different commitments in them.
05:50They include something called a reciprocal tariff level.
05:53For Malaysia, it had been set at 19%.
05:55It also includes commitments by Malaysia to give zero tariffs on a lot of U.S. exports to Malaysia or,
06:03in the case of other agreements, to the U.S. bilateral trade partner.
06:07But also a lot of other commitments, including things on exports and export security issues, sometimes issues on standards, new
06:17treatment potentially, depending on the agreement on agricultural exports or agricultural imports.
06:22So there's a lot of stuff contained in these agreements.
06:25And the U.S. is trying to argue that it all remains unchanged, despite the Supreme Court ruling.
06:30But you might imagine that some of the U.S. trade partners are asking whether that's true.
06:36Is the agreement still as it stands?
06:39The answer seems to be no, because that headline number of reciprocal trade tariff rates have now dropped from, in
06:46the case of Malaysia, from 19% to 10%.
06:48It's unclear how long that will last.
06:51But if the U.S. moves to a new set of tools, does that mean that Malaysia is capped at
06:5719% or could these other trade deals result in higher or lower tariffs for Malaysia remains to be seen?
07:06Looking at ASEAN specifically, some analysts and, of course, government officials have been trying to assure that ASEAN countries have
07:15fared relatively well dealing with tariffs over the past year.
07:18But with growing uncertainty this year, as you said, where does this leave ASEAN member states?
07:25You know, we've seen some of ASEAN member countries having some sort of trouble trying to put up this united
07:32front in negotiating the tariffs under the Malaysian chairship.
07:36Do you think that they'll have just as much challenge this year?
07:40It would have been nice if ASEAN had been able to maintain a united front vis-a-vis the United
07:47States, because I think we would have seen fewer variations.
07:50As it is now, or at least as it was last week, the U.S. had imposed tariffs ranging from
07:5640% on Laos and Myanmar to 10% on Singapore, with most ASEAN countries at 19% and Vietnam
08:03at 20%.
08:04So we had real variation across ASEAN.
08:07You could make a strong argument that the region would have been better off had they been far more united
08:13in dealing with the United States.
08:15That didn't happen because, again, we have sort of different approaches, different levels of exposure to the United States.
08:22And so ASEAN members went off sort of independently and created, in some cases, deals like Cambodia, Malaysia, and now
08:30Indonesia.
08:30In some cases, no deals because either they weren't asked to participate in a deal or a deal wasn't concluded
08:37in the case of Vietnam and Thailand.
08:39And so we have seen across 2025 variations in ASEAN.
08:44In 2026, again, it would be nice if ASEAN could coordinate this year under the Philippines chairmanship.
08:50But I think that is also potentially unlikely because now we have some members who have full agreements, some members
08:58who have frameworks in place, and some members who haven't been addressed at all.
09:02And so just like last year, we have differential tariff approaches and differential commitments vis-a-vis the United States.
09:10It would be hard to now come together and have a unified approach by the region to the United States,
09:16even if in a sort of hypothetical world that might have turned out to be better for the region as
09:22a whole.
09:23Looking at Malaysia specifically, as you mentioned, there's this uncertainty, of course, specifically with the number of tariff or the
09:30percentage that's been set.
09:33Seeing that the art deal that Malaysia has negotiated with the U.S. is considered a sort of finalized, how
09:39do you think Malaysia should negotiate this art deal moving forward?
09:47Again, at least as of the weekend, the United States is suggesting no.
09:52But I think one problem that Malaysia and a lot of trade partners are likely to find is that the
09:58existing agreements only deal with reciprocal trade.
10:01They do not deal with other kinds of tariff approaches like Section 232 for national security or even more problematic
10:10Section 301 on unfair trade practices.
10:13Since those two tools are not covered in these existing agreements, it means that the United States is free, should
10:20it choose to do so, to include an even wider array of coverage under 232 or 301 going forward.
10:28And I think as the U.S. transitions from its now deemed illegal IEPA tariffs to this sort of interim
10:36period that we have right now to the future, which is meant to be 232s and 301s, it will be,
10:44I think, important to at least clarify with the United States, are all of those tariffs meant to be capped
10:50at 19% for Malaysia?
10:52Or is it certain kinds of tariffs, which is less and less relevant as we transition to these new areas?
10:58At the moment, we really don't know.
11:01And so there will be lots of questions, including among, I'm sure, Malaysian government officials who are saying, well, let's
11:07hang on a minute.
11:09Let's at least confirm what is the current status.
11:12And then let's talk about whether there is an opening for us to go back and discuss certain issues.
11:18That can be problematic, right?
11:20Because if we reopen the tariff discussions, we could potentially reopen other discussions.
11:24As an example, the Indonesia deal, which was also signed last week, includes long sections on treatment of halal food
11:32and halal certifications.
11:34It's possible if you reopen the Malaysia deal that you might have similar kinds of requests from the United States,
11:41which would prove problematic for Malaysia.
11:43So you have to be a bit cautious about what you ask for, because if you're going to reopen an
11:47existing agreement, you could be reopening it to things you also don't like, as long as well as the things
11:54that you think are important for you.
11:57Just briefly, how do you think then it will be like moving forward?
12:01Will this be a sort of a push and pull, a constant tug of war, if you will, between Trump's
12:08unpredictable tariffs and Supreme Court or other forms of check and balance?
12:14I think one interesting period that we're in right now is that the current model that we have is likely
12:21also to be ruled illegal, but we may not have enough time for the court to rule on what is
12:27currently in place, which is called Section 122 for a balance of payments crisis.
12:31That also appears to me to be quite an illegal use of this statute.
12:35The real challenge is that as we move forward into Section 232 and Section 301, those kinds of tools are
12:43unlikely to be challengeable by either the Supreme Court or even members of Congress.
12:48And so I think we're moving from a legally fragile condition to one that is on much more solid legal
12:58ground that could be very long lasting.
13:00I mean, once you put in place a Section 232 or a Section 301 designation, that could last, well, it
13:07could last the whole rest of my career.
13:09I mean, that is how durable those are likely to prove.
13:11And so we are in this sort of interesting period of moving from legally shaky ground to much firmer legal
13:19ground.
13:20Interesting is one way to put it.
13:22Thank you so much, Deborah, for joining us.
13:26That was Dr. Deborah Elms, Head of Trade Policy at the Henry Foundation in Singapore, joining us.
13:31But we'll take a short break and we'll be back in a minute to continue our discussion on the U
13:37.S. tariffs.
13:38Don't go anywhere.
13:53We are back on Awani Global, still looking at the fresh wave of U.S. tariffs following the U.S.
13:59Supreme Court ruling last week,
14:01deeming most of Trump's tariffs or initial tariffs unconstitutional.
14:07But Trump this week has announced a temporary 10% global import taxes, potentially raising it to 15% over
14:16the weekend.
14:16And of course, uncertainty and this unpredictability is what we want to talk about.
14:22Joining us now, we have Dr. Juwita Muhammad, Senior Lecturer, Department of Economics, University Malaya.
14:26Thank you so much, Juwita, for joining us again.
14:30I believe, you know, not much difference since the last time we spoke in terms of this uncertainty, this worry,
14:38this anxiety looming over the global economy.
14:41But before we get into the doom and gloom of it all, just some of your overall thoughts on, you
14:47know, the new announcement on the tariffs
14:50and what the Supreme Court has been trying to do, I guess, in trying to keep a check on Trump.
14:56What do you think?
14:56So I think this fresh waves of tariffs and also the U.S. Supreme Court ruling has reintroduced a significant
15:10degree of uncertainty into the global trade.
15:14Unfortunately, it hasn't made things more certain for trade partners like Malaysia, which has signed on to the ART framework
15:26with a tariff cap of 19% for most products.
15:31I guess it can go both ways in how you interpreted it.
15:36So, again, the new fresh wave of tariffs is capped at 15%, which is significantly lower than the 19%
15:46tariffs cap that was negotiated through the ART deal.
15:53But, again, we did see that the U.S. did mention that those who have signed on to ART should
16:02still follow the tariffs and the agreements and the clauses that came with those agreements.
16:12So, again, I think this is, again, it fuels the uncertainty because on the one hand, we did at that
16:21time thought that we signed on to the deal with a lower tariff cap.
16:26But now with the 15%, possibly 15%, there is incentive, there is incentives for countries like Malaysia to renegotiate and
16:37to find avenues where tariffs can actually be lessened significantly.
16:45Again, I've mentioned this before, free trade agreements are meant to provide predictability, legal clarity, and also stability.
16:55But from the outset, even when the ART was signed, there were ambiguities in the interpretation of certain provisions, like
17:07consultations with the U.S., the halal provisions, as well as the SPS provisions and standards.
17:14So, again, the latest U.S. tariff actions and the legal debates surrounding the tariff hikes, the tariff changes, reinforce
17:24that perception that trade rules may be still subject to political shifts.
17:30And this goes back to the question of how valuable an agreement like ART is, especially when uncertainty and risks
17:41are riding high.
17:44Some analysts, and of course, more so from government officials, I think they've been trying to reassure over the past
17:52year that some ASEAN member states have fared relatively well in dealing with the tariffs.
17:58Of course, there's been some challenge in trying to have this united front from ASEAN in negotiating the tariffs as
18:04a collective.
18:05But, you know, with growing uncertainty this year, how do you think ASEAN will face this?
18:12We'll look at the Malaysian art deal a little bit later.
18:15But with ASEAN as a whole in this part of the world, you know, do you think that they'll be
18:19able to manage it as much as they did last year?
18:23So I think for countries like Malaysia who have signed on to the art deal, I think, again, there are
18:33grounds for renegotiation and for clarification.
18:38And here, I think there's ground for bilateral talks to happen soon if the prime minister of Malaysia was going
18:49to go to the U.S.
18:50I think this would be high on his agenda.
18:53But I think due to this uncertainty, it is very clear that the U.S. is, again, a very risky
19:04trade partner.
19:06And whether the ASEAN countries like it or not, whether the exporters like it or not,
19:13I think the very clear answer to this is, again, to really strategize for trade diversification to happen.
19:24I think in the last year, preemptively, countries like Malaysia, we've signed on to new trade deals.
19:32We have reviewed and upgraded existing free trade agreements, I think, also to minimize this risk of trade wars with
19:47the U.S.
19:48But I think now, even with the Supreme Court ruling, even with FTA still in place, you can see that
19:58uncertainty is still very high.
20:00So, with this, I think more exporters will now see, you know, we cannot wait for the next round of
20:09tariff introduction.
20:10I think it's time for us, at the ground level, at the firm level, to strategize and to shift away
20:18from the U.S. market as its sole destination market, if it hasn't done so.
20:26So, with the Malaysian art deal, earlier we were speaking with Dr. Deborah as well, and she also, you know,
20:32pointed out the sort of confusion about the number, you know,
20:36and the different perspectives about the art deal as well.
20:39From the U.S. perspective, it seems that the art deal is considered finalized.
20:44But if there is room to negotiate, there should be this sort of incentive, as you said.
20:49So, what do you think?
20:51What do you make of this?
20:52Is there room to negotiate?
20:54Do you think that Malaysia rushed into it in the first place?
20:57So, again, free trade agreements are supposed to provide incentives where it could be incentives.
21:07Usually, it's in the tariff terms.
21:10But if you've signed on to a trade deal, which offers a higher tariffs, tariff rate from the, you know,
21:20from the other normal countries who haven't signed on to these trade deals,
21:27I think we've got the shorter end of the stick, unfortunately.
21:32So, again, this is very clear to me that free trade agreements are supposed to, you know, give you benefits.
21:42So, then the question is, would it be an even bigger incentive for Malaysia not to sign on to the
21:50art deal, again, because of the differences in tariffs?
21:52So, because of this, and again, there are changes in the introduction of tariff rates globally,
22:03I think there is ground for Malaysia to, again, reach out to Washington to ask for, not just clarification, but
22:11this is grounds for renegotiation, possibly.
22:15How do you think Malaysia should navigate this moving forward?
22:18Do you think there are some lessons to be learned from perhaps neighbouring countries in ASEAN?
22:23Indonesia has been trying to manage it on its own as well.
22:26Do you think that there's some lessons to be learned there?
22:29So, again, for Malaysia, we are in a relatively advantageous position because so far, there is no deadline for ratification
22:41given by Washington.
22:42And our cost and benefit analysis is still ongoing.
22:46So, I think it was supposed to be for six months, but it may be extended to a year.
22:52So, this means that we now have the time to, number one, scrutinize the implementation clauses carefully.
23:01It's not just about reading the clauses.
23:03It's about how we're going to implement it.
23:05And second is to assess the impacts, not only economically, but socially and also strategically for these provisions to be
23:17implemented.
23:19And again, I've said this before in numerous avenues, we need to evaluate the implications for sovereignty and also our
23:30regulatory autonomy.
23:31Because in some parts of the provisions, there's language of consultation with the U.S., consultation with the U.S.
23:41So, again, this may need to be redefined or re-clarified for the purpose of sovereignty.
23:53Even though I'm an economist, of course, I feel that a quantitative model may show positive trade gains and welfare
24:03gains because in economic modeling, you will look at the reduction of non-tariff barriers.
24:10However, non-tariff provisions that have been introduced through the art require qualitative assessment, again, because of the way it's
24:23going to be implemented.
24:24So, this means that MITI, with its different agencies, they need to be interviewing industry stakeholders, as well as consulting
24:36with halal certification bodies, engaging SMEs, and also assessing the regulatory costs of rectifying and also implementing the provisions.
24:48So, again, the decision, the CBA, the cost-benefit analysis should not be based purely on projected welfare gains, but
24:59it also needs to have a comprehensive evaluation of long-term structural implications, namely for pillars, like not just the
25:09economic pillar, but also the social pillar and also the security and sovereignty pillars, in my opinion.
25:16Yeah. Just briefly, I think it would also be nice to reflect on some of the earlier conversations that we
25:23had.
25:23I think the last time we spoke, it was, you know, this sort of economic outlook for 2026.
25:29Some pessimism, of course, but of course, a little bit of optimism about how the global economy might fare this
25:35year.
25:36Do you think that this might change your perspective on the global economic outlook this year?
25:42Yeah, I was thinking about that as well, but I think, again, as mentioned, this will create more uncertainty.
25:54And I think at the end of last year, when we talk about the uncertainty concerning the art deal and
26:02concerning the tariffs introduction, I think we were waiting for the U.S. Supreme Court's ruling.
26:11But even with the ruling, we do see that in Trump's pocket, he might have another two or three legal
26:20ammunitions.
26:21Some of these ammunitions, like legal ammunitions, haven't been used for over 50 years.
26:30So again, he will use all of these different legal instruments to still try to push his protectionism policy to
26:47the end goal.
26:49So I don't think this is going to be remedied in the coming months.
26:56I do see that it's going to be played out towards the rest of the year, if not spilling over
27:04to early next year.
27:06And this goes back to how creative Trump is using all of the means that he has when it comes
27:17to protectionism.
27:19All right. Thank you so much, Dr. Jurita, for joining us.
27:22Thank you for having me.
27:24Yeah, that was Dr. Jurita from University of Malaya, Department of Economics, joining us, sharing some thoughts on the new
27:32wave of U.S. tariffs and of course the U.S. Supreme Court ruling.
27:36That is all on Awaning Global this week. We'll catch you the next time.
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