Trump’s 24% Tariff on Malaysia Roils Markets and Fuels Gold Price Surge
Trump’s Reciprocal Tariff Policy – What Happened?
In early April 2025, the United States shocked global markets by imposing a 24% “reciprocal” tariff on Malaysian imports as part of President Donald Trump’s sweeping trade measures (US imposes 24% reciprocal tariff on Malaysia | The Star). Effective April 9, this hefty levy was aimed at countries with which the U.S. runs large trade deficits (Malaysia hit with 24% US reciprocal tariff effective April 9). Malaysia – which enjoys a trade surplus with the U.S., mainly via exports of electronics, palm oil and machinery – found itself 11th on Trump’s tariff list (Malaysia hit with 24% US reciprocal tariff effective April 9) (US imposes 24% reciprocal tariff on Malaysia | The Star). Notably, the policy isn’t blanket: not all Malaysian goods are hit, as critical products like medical gloves and semiconductors were exempted from the 24% duty (Malaysia hit with 24% US reciprocal tariff effective April 9). These tariffs come on top of a new baseline 10% tariff on all imports into the U.S., a broad stroke measure that took effect on April 5 (Malaysia hit with 24% US reciprocal tariff effective April 9). Higher country-specific duties (Malaysia’s 24% included) kicked in a few days later.
Market Shock: Stocks Swoon, Currency Slips, Commodities Diverge
The tariff announcement sent shockwaves through markets. In Malaysia, the stock market opened sharply lower on April 3 as investors reacted with a knee-jerk selloff. The benchmark FBM KLCI index quickly fell about 0.45%, with decliners far outnumbering gainers (Bursa Malaysia slips on Trump's tariff shock | The Star). Analysts noted that while Malaysia’s exports would take a hit, the country isn’t the worst off (the U.S. comprises roughly 10% of Malaysia’s total trade) – a factor that could limit the downside after the initial panic (Bursa Malaysia slips on Trump's tariff shock | The Star). Even so, the sentiment was grim across the region: Trump’s move escalated fears of a global trade war redux, souring equity markets from Asia to Europe. High-flying tech stocks – heavily reliant on global supply chains – were particularly hard-hit amid worries that new tariffs (for example, a cumulative 54% levy on most Chinese tech imports) would disrupt trade ( Markets roiled: Oil and copper slide, gold hits record high on tariff uncertainty | Malay Mail ).
In currency markets, safe-haven flows kicked in. The Malaysian ringgit weakened against the U.S. dollar following the news, briefly sliding past RM4.45 per USD – its immediate support level ( Ringgit feels the heat as Trump’s tariffs boost US dollar | Malay Mail ) ( Ringgit feels the heat as Trump’s tariffs boost US dollar | Malay Mail ). As one economist noted, traders turned defensive, boosting demand for “safe haven currencies such as the US dollar” amid fears the tariffs will dent global growth ( Ringgit feels the heat as Trump’s tariffs boost US dollar | Malay Mail ). The ringgit also lost ground against other major currencies like the yen and euro ( Ringgit feels the heat as Trump’s tariffs boost US dollar | Malay Mail ). This reflected a broader trend: investors flocked to assets perceived as shelters in times of uncertainty, shunning riskier holdings.
Commodity markets displayed a split reaction. Growth-sensitive commodities tumbled on concerns that harsher trade barriers will squeeze worldwide demand and possibly tip economies toward recession ( Markets roiled: Oil and copper slide, gold hits record high on tariff uncertainty | Malay Mail ). Crude oil prices slid about 2–3% – with Brent crude falling to around US$73.28 per barrel – as traders fretted that slower global growth would curb fuel consumption ( Markets roiled: Oil and copper slide, gold hits record high on tariff uncertainty | Malay Mail ). Industrial metals like copper and aluminum also lost over 1% ( Markets roiled: Oil and copper slide, gold hits record high on tariff uncertainty | Malay Mail ) ( Markets roiled: Oil and copper slide, gold hits record high on tariff uncertainty | Malay Mail ). By contrast, traditional safe havens surged. Most notably, gold – the classic refuge in times of turmoil – absolutely soared, reaching levels never seen before. Let’s take a closer look at how gold became the standout winner from Trump’s tariff gambit.
Gold Prices Hit Record Highs Amid Tariff Turmoil
Gold is shining brighter than ever. In the wake of the tariff announcement, spot gold leapt to an all-time high, peaking around US$3,167 per ounce on April 3 ( Markets roiled: Oil and copper slide, gold hits record high on tariff uncertainty | Malay Mail ). To put this into perspective, gold has climbed over 19% in 2025 so far, a remarkable rally fueled in large part by the mounting tariff uncertainty and related economic jitters ( Markets roiled: Oil and copper slide, gold hits record high on tariff uncertainty | Malay Mail ). In fact, the first quarter of 2025 was gold’s strongest since 1986, marking one of the steepest upswings in the metal’s modern history (Gold price hits all-time high | The Star). The surge continued into early Q2 as trade tensions escalated. U.S. gold futures likewise jumped (topping US$3,170), reflecting bullish sentiment across the board (Gold price hits all-time high | The Star).
Several factors sent investors stampeding into gold. Politically and financially, uncertainty abounds – and gold thrives on that. It is viewed as a hedge against turmoil, and Trump’s tariff spree added a big dose of exactly that: fears that the trade war will fuel inflation and impede economic growth drove a rush into safe-haven assets like gold (Gold price hits all-time high | The Star). Tariffs can raise the cost of goods and input materials, stoking inflationary pressures, while simultaneously slowing trade and investment – a stagflationary one-two punch that investors dread. Gold offers a hedge on both fronts: its value tends to rise with inflation and during times of economic stress. It’s no surprise then that on the day of Trump’s announcement, “safe-haven gold jumped to an all-time high” as recession fears grew ( Markets roiled: Oil and copper slide, gold hits record high on tariff uncertainty | Malay Mail ).
Another driver is interest rate expectations. If the global economy slows under the weight of trade barriers, central banks (including the U.S. Federal Reserve) might pivot to cut interest rates to stimulate growth. The mere potential for future rate cuts makes non-yielding assets like gold more attractive by lowering the opportunity cost of holding gold ( Markets roiled: Oil and copper slide, gold hits record high on tariff uncertainty | Malay Mail ). Moreover, currency volatility is benefiting gold: the U.S. dollar has strengthened as a safe haven, and other currencies (like the ringgit) weakened – dynamics that often push local gold prices higher. In times of dollar strength and emerging-market currency weakness, investors in those markets pile into gold to preserve value, adding to demand.
Finally, central banks themselves have been big buyers of gold, providing solid underlying demand. In recent years many countries – notably China, India, Turkey and others – have accumulated gold reserves as a safeguard. (In 2022, central banks globally bought a record 1,136 tonnes of gold ( Gold price in Malaysia: Rates on April 3 ), and that trend has continued.) This central bank buying, alongside geopolitical tensions elsewhere in the world, has created a supportive backdrop for gold ( Markets roiled: Oil and copper slide, gold hits record high on tariff uncertainty | Malay Mail ). In short, a confluence of factors – ranging from tariff-induced inflation fears to global uncertainty and safe-haven flows – all coalesced to send gold prices soaring.
Gold in Malaysia: All-Time High in Local Terms
The gold frenzy is very much felt in Malaysia as well. With the ringgit sliding and global prices at record levels, local gold prices have hit all-time highs. On April 3, gold was trading around RM452 per gram in Malaysia (approximately RM14,050 per troy ounce) ( Gold price in Malaysia: Rates on April 3 ) ( Gold price in Malaysia: Rates on April 3 ). This is up from about RM448/gram just a couple of days earlier, and it marks the highest nominal price ever recorded in ringgit terms. Malaysian investors holding gold have seen their assets appreciate significantly in value. On the Bursa Malaysia Derivatives Exchange, gold futures contracts have been climbing in tandem with international prices – the April 2025 contract, for instance, breached the US$3,100 level per ounce, mirroring the COMEX gold surge (BERNAMA - Gold Futures On BMD Close Higher In Line With COMEX Gold Performance). Essentially, Malaysians are paying more for gold than ever before, thanks to the combination of a pricier US dollar and gold’s intrinsic rally. For context, just a year ago gold was roughly half these levels in ringgit terms, illustrating how dramatic the rise has been.
Why Are Gold Prices Soaring? Key Factors
Several key factors are driving the spike in gold prices in this environment:
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Inflation and Slowdown Concerns: Tariffs act like a tax on trade, potentially raising prices of imported goods. Investors worry Trump’s tariffs “might fuel inflationary pressures and impede economic growth,” prompting them to seek inflation hedges and safety (Gold price hits all-time high | The Star). Gold historically performs well during such stagflation fears, so demand has spiked.
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Geopolitical & Policy Uncertainty: The unpredictable nature of a global trade war – along with other geopolitical tensions – has injected significant uncertainty into markets. Gold is seen as a hedge against political and financial uncertainty ( Markets roiled: Oil and copper slide, gold hits record high on tariff uncertainty | Malay Mail ). When headlines scream chaos (be it tariffs or other conflicts), gold draws in buyers looking for stability.
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Currency Volatility: In times of stress, investors often rush into currencies like the U.S. dollar or Japanese yen. The ringgit’s slide reflects that dynamic ( Ringgit feels the heat as Trump’s tariffs boost US dollar | Malay Mail ). For Malaysians (and others), a weaker local currency makes gold more expensive but also more appealing as a store of value. Globally, as currencies fluctuate, gold – which isn’t tied to any single country – serves as an alternative monetary asset.
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Interest Rate Outlook: The tariffs heighten the risk of an economic downturn, which in turn raises expectations that central banks will cut interest rates or inject stimulus. Lower interest rates decrease the appeal of interest-bearing assets relative to gold. The mere hint of rate cuts has been enough to bolster gold; analysts noted that gold’s run in 2025 has been aided by the “potential for interest rate cuts” amid trade uncertainty ( Markets roiled: Oil and copper slide, gold hits record high on tariff uncertainty | Malay Mail ).
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Central Bank Demand: Bolstering the trend, central banks have been buying gold at a historic pace (especially in emerging markets) as they diversify reserves ( Gold price in Malaysia: Rates on April 3 ). This institutional demand provides a firm floor under gold prices. When investors sense that even central banks are hoarding gold, it reinforces gold’s status as a safe asset during crises.
All these factors interconnect. The tariff shock amplified inflation and recession fears, triggered currency moves, and reinforced gold’s appeal in portfolios – creating a perfect storm for record-high gold prices.
Implications for Malaysians: Consumers, Investors, and Exporters
The ripple effects of the U.S. tariff and surging gold prices are being felt on multiple fronts in Malaysia. Here’s what it means for different groups:
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Consumers: Malaysian consumers may face a higher cost of living in the short to medium term. A weaker ringgit makes imported goods – from food staples to gadgets – more expensive in local stores. If U.S. tariffs and possible retaliations disrupt global supply chains, prices of some products could rise. There’s also the specter of general inflation if companies pass on higher costs. On the flip side, Malaysians who previously purchased gold (jewelry, coins, etc.) have seen the value of that gold jump. However, buying new gold jewelry now will cost considerably more than it did a year ago, which could dent retail demand. Overall, household budgets might tighten if inflation creeps up and economic growth slows as a result of the trade war. It’s a good time for consumers to be cautious with big-ticket purchases and watch price trends.
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Investors: The tariff turmoil brings both challenges and opportunities for investors. Stock market volatility is likely to persist – as we saw, Malaysian equities sold off on the tariff news, and they could remain choppy until clearer signs emerge on a U.S.-Malaysia trade resolution. Export-oriented companies might see pressure on earnings, which could weigh on the local bourse. Investors will need to brace for potential swings and perhaps adopt a more defensive stance. Many are already rotating into safe havens like gold, either through gold ETFs, bullion, or gold mining stocks, to hedge their portfolios. Those who did so early have been rewarded handsomely, with gold up nearly 20% this year ( Markets roiled: Oil and copper slide, gold hits record high on tariff uncertainty | Malay Mail ). On the other hand, there have been some surprise winners in the stock market: for example, Malaysia’s glove manufacturers saw their shares surge, as gloves were exempted from U.S. tariffs, giving them an edge over overseas rivals facing tariffs (Malaysia hit with 24% US reciprocal tariff effective April 9). This shows that investors need to be selective – certain sectors (like technology hardware or palm oil producers) might face headwinds in the U.S. market, while others (like medical supplies or semiconductor firms) could prove resilient or even gain market share. Diversification and vigilance are key in this uncertain climate.
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Exporters: Malaysian exporters are at the frontline of impact from the 24% tariff. Companies that ship a significant portion of their goods to the U.S. now find their products at a steep price disadvantage in that market. They essentially have three choices: absorb the tariff (hurting their profit margins), pass on the cost to U.S. consumers (risking a drop in sales), or try to pivot to other markets. None are easy. Sectors likely to feel the pinch include electronics manufacturers, machinery exporters, and palm oil producers – all big Malaysian export categories to America (Malaysia hit with 24% US reciprocal tariff effective April 9). To illustrate, an electronics component maker selling to the U.S. will see its product taxed an extra 24% at the border (unless it falls under an exempt category like certain semiconductors). Over time, U.S. buyers might source from elsewhere if Malaysian goods become too pricey. Some relief comes from the ringgit’s depreciation, which makes Malaysian exports cheaper in dollar terms and could offset a bit of the tariff impact. Also, Malaysia’s tariff rate is lower than what some competitors face (for instance, Vietnam’s 46% tariff), so Malaysian exporters could actually become relative beneficiaries in certain industries if U.S. importers shift away from higher-tariff countries. Additionally, as noted, key industries like glove makers and semiconductor firms dodged the tariff bullet (Malaysia hit with 24% US reciprocal tariff effective April 9), which means they can compete in the U.S. market unencumbered – potentially picking up business that might have gone to tariff-hit competitors in China or elsewhere. Still, for the majority of exporters, the tariff is a clear headwind. Many firms are likely in contingency-planning mode: exploring alternate markets (within ASEAN, for example), optimizing costs, and lobbying the government for support or a negotiated solution. The Malaysian government’s decision to negotiate (and not retaliate) is crucial here – if successful, it could lead to exemptions or a reduction in the tariff down the line, easing the pressure on exporters. In the meantime, businesses will have to adapt to what could be a prolonged period of trade tension.
Conclusion
The U.S.’s 24% reciprocal tariff on Malaysia has created immediate turbulence – jolting markets, boosting safe-haven assets like gold, and challenging the outlook for Malaysia’s trade-dependent economy. Global gold prices are hitting record highs as investors flock to safety, a trend mirrored in Malaysia’s local gold market. For Malaysians, the developments are a mixed bag: a costlier import bill and pricier gold on one hand, but potential gains for those invested in safe havens or in certain advantaged export sectors on the other. How this situation evolves will depend on high-stakes negotiations and whether cooler heads prevail in the trade dispute. For now, both investors and policymakers are navigating uncharted waters. If you’re a consumer or investor, it’s wise to stay informed and agile – as the past weeks have shown, policy decisions can swiftly alter economic currents. And for exporters and businesses, it’s all about resilience and adaptation. Malaysia has weathered external shocks before, and with strategic responses, it can mitigate the damage. One thing is clear: in this new era of tariff uncertainty, the only true safe haven may continue to be gold ( Markets roiled: Oil and copper slide, gold hits record high on tariff uncertainty | Malay Mail ) (Gold price hits all-time high | The Star), at least until the storm clouds on the trade front begin to clear.
Sources: Recent news reports and market data on the April 2025 U.S.–Malaysia tariffs and gold prices (US imposes 24% reciprocal tariff on Malaysia | The Star) ( Markets roiled: Oil and copper slide, gold hits record high on tariff uncertainty | Malay Mail ) ( Markets roiled: Oil and copper slide, gold hits record high on tariff uncertainty | Malay Mail ) (Malaysia hit with 24% US reciprocal tariff effective April 9), including coverage from The Star, The Edge Malaysia, Malay Mail, and Bernama.
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