Yeah, that's right. The story is that Tamaki was traumatized by seeing his mother have sex, he views sex as "hurting" someone because his mom used to says stop during sex. The asexual thing was just the sex friend speculating with Shii after hearing about Shii's experiences with Tamaki sexually. We tge reader have thst window into Tamaki's past and we saw how he masturbated after that encounter with Shii, but from Shii's perspective Tamaki is like a puzzle. Like he just said, he knows Tamaki is interested in sex, but won't say so or act on it for some reason.
Ugh... typos:
Say, not says*
The, not tge*
That, not thst*
To add on to my comment: Remember, Shii has never been over to Tamaki's house and only knew Tamaki saw his mom have sex, he doesn't know exactly what the trauma is. It's that he feels sex is "bad" and "abussive". "Bad" as in it's a trait his mother doesn't like, so she'll hate him and "abusive" in the sense that he thinks it hurts the one taking.
Bringing this up a second time, I am asexual and I don't think Tamaki is. I think it's super cool that the author knows about asexuality and has two characters discussing it without being like "omg that's not really a thing", but given the fact that we can see Tamaki's internal dialogue and have context for his actions, it's really safe to say that he isn't ace.