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High Drama and Big Impact: Trump’s Bold Tariff Plans and What to Expect

Expect significant new tariffs on Chinese imports and moderate levies on goods from other nations , as President-elect Donald Trump rolls out his protectionist agenda. However, with his preference for chaotic policymaking and sudden shifts , there’s uncertainty on how soon these import taxes will actually hit. Dubbed “ Tariff Man ,” Trump aims to use tariffs both strategically and tactically . He’s mentioned taxing all Chinese goods up to 60% and potentially setting 10%-20% tariffs on imports globally , but details on these plans remain vague . Key players within Trump’s team are divided: Robert Lighthizer , a staunch tariff advocate, sees permanent duties as crucial to balance US trade , while others, like billionaires John Paulson and Scott Bessent , view tariffs as temporary leverage. Trump’s previous administration had mixed feelings, especially on national security-related trade limits , which he sometimes dismissed, favoring an “open for business” approach. High-profile busin
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Malaysia's RON95 Subsidy and Fiscal Outlook

The Australia & New Zealand Banking Group (ANZ) has issued a cautionary report regarding Malaysia's need to rationalize its RON95 petrol subsidies in 2025, especially following a significant salary hike for civil servants. Here are the key points from the report:


Fiscal Burden and Subsidy Context

  • Current Subsidy Situation: While the subsidy burden for RON95 has decreased compared to previous years, it remains at a high level. The government's recent decision to increase civil servants' salaries—by at least 13%, effective December 1, 2024—will add approximately RM10 billion to operational expenditures.
  • Government Revenue Trends: Malaysia's revenue contracted by 6.3% in the first half of 2024 year-on-year, while expenditures grew by 1.3% during the same period.

Recommendations for Subsidy Rationalization

  • Urgent Need for Change: ANZ emphasizes that the blanket subsidy on RON95 needs to be removed to prevent escalating fiscal pressures. This follows the recent removal of diesel subsidies, with similar rationalization for RON95 expected.
  • Impact on Inflation and Monetary Policy: Any inflationary impact resulting from subsidy changes is anticipated to be perceived as a one-time adjustment by Bank Negara Malaysia, which is unlikely to prompt any changes in policy rates. The current overnight policy rate is expected to remain at 3.00% through the end of 2024.

Economic Growth and Budget Deficit

  • Growth Prospects: Despite these challenges, the government is on track to reduce its budget deficit as a percentage of GDP to 4.3% in 2024 from 5.0% in 2023, aided by strong economic growth and lower crude oil prices.

Conclusion

The call for subsidy rationalization highlights a critical juncture for Malaysia's fiscal policy, balancing the need for sustainable financial management against public sector wage increases. As the government navigates these challenges, it must ensure that adjustments do not adversely impact economic stability or consumer sentiment.

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