KUALA LUMPUR: Even if Donald Trump’s “Liberation Day” 24 per cent tariff on Malaysia has been postponed, Malaysians will be fearful about what this all means for their livelihoods.

Businesses in Malaysia are making the most of the temporary reprieve, rushing to fulfil US-bound orders before the higher levy kicks back in. As this past week has reinforced, there is little basis on which to judge how long any Trump policy will continue, including the 90-day pause.                

Estimating the impact of tariffs and the wider Trump agenda on the Malaysian and global economies would be desirable. But it is ultimately an exercise in futility.

There is no way to reasonably predict how trade will adjust to a differential tariff shock that simultaneously affects all countries and nearly all goods. And leading estimates rely on models that falsely treat increasing and decreasing tariffs as the same shock, ignoring that existing traders have greater means and incentives to subvert new tariffs and preserve trade.

In practice, global markets will quickly learn to circumvent poorly enforced trade barriers: Russia’s trade patterns since its February 2022 Ukraine invasion are a case in point. Potential “government efficiency” cuts to the US customs workforce will not help enforcement, and China’s extensive trade and logistics networks leave it better placed than Russia to undercut escalating tariffs. 

What can be more confidently stated is that the economic implications of an unpredictable, uncooperative and illiberal US administration will be much greater than the trade impact of tariffs. While equally challenging to measure, the wider fallout will be of an order of magnitude greater.

A GREATER PROBLEM THAN TRADE DISRUPTION

Unpredictability is making investors across the world jittery. The world’s largest economy and con...