Cover US President Donald Trump (Photo: Getty Images)
US President Donald Trump (Photo: Getty Images)
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US president Donald Trump has aggressively pursued his “America First” trade policy since taking office and shook global markets with sweeping tariff measures. We speak to experts to understand its impact on Malaysia
Since taking office, US President Donald Trump has implemented a series of controversial trade policies, including tariffs on Chinese goods and threats of similar measures against Canada and Mexico. These tariffs, intended to protect American economic interests and curb illegal immigration and drug trafficking, have escalated global trade tensions.
With Malaysia playing a crucial role in the global semiconductor supply chain—accounting for 13 per cent of the world’s chip testing and packaging services—the nation faces potential ramifications from this evolving trade landscape.
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To gain a clearer perspective on how Malaysia can navigate these uncertainties, we spoke to three experts: Dr Ong Kian Ming, former Malaysian Deputy Minister of International Trade and Industry; Jayant Menon, Visiting Senior Fellow at the ISEAS – Yusof Ishak Institute; and Dato’ Seri Wong Siew Hai from the Malaysia Semiconductor Industry Association.
Above Dr Ong Kian Ming, former Malaysian Deputy Minister of International Trade and Industry and Pro Vice-Chancellor for External Engagement and Lead of the PPE Industry Advisory Panel at Taylor’s University
Dr Ong Kian Ming, former Malaysian Deputy Minister of International Trade and Industry and Pro Vice-Chancellor for External Engagement and Lead of the PPE Industry Advisory Panel at Taylor’s University
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The recent 30-day reprieve on tariffs targeting Canada and Mexico has momentarily postponed trade disruptions for those countries, but uncertainty looms over their long-term economic relationship with the US. Should these tariffs proceed, Malaysia’s investments in these markets—excluding a few exceptions such as Petronas’ involvement in Canada’s tar sands—are unlikely to experience significant direct impact.
“Malaysian investments in both countries that involve exports to the US are minimal, with the exception of Petronas’ investments in Alberta’s tar fields,” Ong explains.
However, the broader concern lies in the impact of tariffs on China, which could disrupt Malaysia’s supply chain if Chinese exports to the US decline. That said, he notes that Malaysia may also benefit if American companies seek alternative suppliers.
Above Jayant Menon, Visiting Senior Fellow at the ISEAS – Yusof Ishak Institute
Jayant Menon, Visiting Senior Fellow at the ISEAS – Yusof Ishak Institute
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Jayant echoes this sentiment, highlighting Malaysia’s strong trade and investment ties with China. “Any tariffs on China will reverberate through the supply chain and impact Malaysia indirectly,” he says.
While the past US-China trade war saw Malaysia benefiting from investment diversions, this trend may not continue if Trump shifts focus from location-based tariffs to ownership-based restrictions, limiting companies’ ability to relocate operations.
Both Ong and Jayant agree that it is only a matter of time before Trump turns his attention to Southeast Asia. “Malaysia and Vietnam both run trade surpluses with the US, making them likely targets,” Ong warns. Jayant adds that Trump views trade deficits as evidence of unfair practices, a perspective that could drive further tariff impositions on the region.
Ong suggests that Malaysia, as Asean chair, should work on securing a consensus among member states to negotiate with the US. He proposes measures such as increasing IT service purchases from American tech companies to mitigate the severity of potential tariffs.
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Jayant, however, remains sceptical about any diplomatic efforts changing Trump’s stance. “The best response from Malaysia and Asean is actually to do nothing. Retaliatory tariffs would hurt Malaysia more than they would impact the US,” he argues. Instead, he advises maintaining a stable economic strategy and avoiding escalation.
Above Dato’ Wong Siew Hai, president of Malaysia Semiconductor Industry Association and Tatler Malaysia’s 2023 Asia Most Influential honouree
Dato’ Wong Siew Hai, president of Malaysia Semiconductor Industry Association and Tatler Malaysia’s 2023 Asia Most Influential honouree
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Wong believes that while general tariffs on electronics could pose challenges, Malaysia remains a complementary player to the US rather than a direct competitor. “The US wants to be self-sufficient in high-end chip manufacturing, which is why they are building wafer fabs domestically. However, for backend services like testing and packaging, Malaysia continues to be a key partner,” he explains.
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Above China responded to a new 10 per cent tariff from the US by imposing a 15 per cent tariff on some types of coal it imports from the US, among other measures (Photo: Getty Images)
China responded to a new 10 per cent tariff from the US by imposing a 15 per cent tariff on some types of coal it imports from the US, among other measures (Photo: Getty Images)
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Despite this, he acknowledges that trade restrictions could tighten unpredictably due to national security concerns. “The US is quite paranoid, and policies can shift overnight,” he warns.
Ultimately, Jayant believes Trump’s tariff policies stem from a fundamental misunderstanding of global trade. “The US trade deficit is largely due to its savings-investment imbalance. Americans overspend while relying on the US dollar’s reserve currency status,” he explains. “Trump’s tariffs are an attempt to correct what he perceives as unfair trade, but in reality, they mostly end up hurting US consumers and businesses.”
Ong adds that while Trump’s trade policies align with his campaign promises, their effectiveness remains questionable. “Tariffs may backfire by increasing inflation and raising the costs of goods, undermining other economic goals,” he notes.
As Malaysia prepares for potential disruptions, a strategic approach is essential. While diversification and regional cooperation offer potential buffers, the experts agree that the nation must also brace for further trade uncertainties.
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Sim Wie Boon is the general manager of Tatler Malaysia. Previously the print and digital editor, Sim hails from the land of the hornbills, Sarawak. Sim is now based in Kuala Lumpur and brings more than a decade of experience in the media industry as a journalist and broadcast producer.
As a self-proclaimed geriatric millennial, he appreciates the finer things in life, from savouring a sip of single malt whisky to relishing in the deliciousness of char siew. While reminiscing about the indie-sleaze era, Sim now finds solace in the soothing tunes of ambient music, staying active through running and occasionally succumbing to the addictive world of doom scrolling.
Follow him on Instagram or Threads at @simwb
