By Lim Li Lian

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Coming from an entrepreneurial background, Trump has a transactional and zero-sum approach,

which he has brought to his role as the President of the United States. He has previously threatened 60% tariffs on all imports from China, and a blanket 10-20% on all other imports. These tariffs will have various effects on Malaysia, both positive and negative. 

In this article, the author lays out what the implications are for Malaysia on the threatened tariffs, and how Malaysia can navigate the uncertainties of the new international and regional trade landscape.

In the short term, there will be positive and negative impacts on Malaysia’s trade. 60% tariffs on chinese goods will negatively impact Malaysia through the supply chain but some Malaysian sectors may benefit as competition from Chinese-made goods decreases. However, increasing trade deficits with the US need to be managed to ensure they are not contributed mainly by Chinese firms using Malaysia as a low-value added re-export hub. In the medium term, it is essential to watch how the Chinese government and its firms react, which is also influenced by the interplay between the US government’s stance on immigration and industrial policy. 

Malaysia should explore the possibility of a fifth option for Chinese companies, but this strategy is viable only if the chances of the Chinese coming to a deal with the US are slim. Finally, Malaysia should invest more resources in active neutrality as this is vital to its success in navigating the treacherous waters of the current trade war.