KUALA LUMPUR, April 3 (Bernama) -- Bursa Malaysia closed marginally lower on Friday, as cautious sentiment persisted, with investors remaining on the sidelines amid ongoing conflicts in West Asia, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 2.80 points, or 0.16 per cent, to 1,695.50 from Thursday’s close of 1,698.30. The benchmark index opened 5.82 points higher at 1,704.12, and moved between 1,693.65 and 1,708.12 throughout the day. However, market breadth remained positive, with gainers outnumbering losers 634 to 415, while 521 counters were unchanged, 1,077 untraded and 10 suspended. Turnover improved to 3.38 billion units worth RM2.95 billion from yesterday’s 3.20 billion units worth RM3.50 billion.
The Trump administration is preparing a major overhaul of US steel and aluminum tariffs, with changes that could raise effective costs for importers while simplifying compliance for manufacturers.
Shift to Simpler but Broader Tariff Structure
Under the proposed changes, finished goods containing steel and aluminum will face a 25% tariff on the full product value, replacing the current system.
Previously, tariffs of up to 50% applied only to the metal content within a product. The new approach simplifies calculation but broadens the taxable base, potentially increasing overall duties.
Commodity-grade metals will still face 50% tariffs, maintaining strong protection for domestic producers.
The policy is being driven by Donald Trump’s push to reshore manufacturing and strengthen domestic industry.
Higher Costs Despite Lower Headline Rates
While the headline tariff rate appears lower, the impact is likely the opposite.
By applying duties to the entire value of imported goods, companies importing products such as:
- Auto parts
- Machinery
- Furniture
- Industrial components
may face higher total tariff costs, especially for complex products where metal is only part of the value.
Revenue Boost and Policy Trade-Offs
The changes could also increase government tariff revenues, helping offset losses after US courts invalidated some earlier trade levies.
At the same time, the overhaul addresses a long-standing complaint from manufacturers: the difficulty of calculating metal content in finished goods.
Winners and Losers
Potential beneficiaries:
- US steel and aluminum producers
- Domestic manufacturers competing with imports
Potential losers:
- Importers and manufacturers reliant on foreign inputs
- Consumers facing potential higher prices
Market and Sector Implications
The policy could have broader implications across markets:
- Industrial and manufacturing sectors may see cost pressures
- Supply chains could shift toward domestic sourcing
- Inflation risks may rise, especially if costs are passed through
Investors will also watch how this interacts with existing geopolitical tensions and elevated commodity prices, which are already pushing input costs higher.
Investor Takeaways
- The US plans to revamp steel and aluminum tariffs, shifting to a 25% duty on total product value.
- Despite a lower rate, the change may increase effective costs for many imports.
- The move supports domestic manufacturing and tariff revenues, but raises cost pressures for businesses.
- Sectors reliant on imported materials could face margin compression or price increases.
- The policy adds another layer of inflation risk amid already elevated energy prices.
Comments
Post a Comment