Malaysian Exports Likely to Feel Onslaught of US Reciprocal Tariffs

Donald Trump's Liberation Day announcement on Wednesday involves reciprocal tariffs on more than 180 countries and territories, and Malaysia, of course, makes the list.

With the US being a major trading partner for Malaysia, the reciprocal tariffs can be expected to hit some of the country’s biggest industries. In 2024, exports to the US reached an all-time high, valued at nearly RM200 billion, according to data from the Malaysia External Trade Development Corporation (MATRADE). 

Here are the top five export sectors likely to feel the onslaught of Trump’s latest tariffs, based on their current export value to the US:

1. Electronics and Electricals: This includes integrated circuits, semiconductors and components for electrical and electronic goods. However, Washington has exempted semiconductors from the reciprocal tax given its strategic value. The estimated value of E&E exports alone was estimated at over RM50 billion in 2024. 

2. Machinery, equipment and parts: Malaysia exports machinery like automatic data processing machines, printing machines and components, air conditioning machines and components and parts of typewriters and calculating machines, among others, according to the United Nations Comtrade database. Export value was estimated at $6 billion (about RM27 billion) in 2024. 

3. Medical machines, optical parts: They include instruments and appliances used for medical, dental, surgical and veterinary purposes. Estimated export value in 2024 was $3.89 billion (around RM17.5 billion). 

4. Rubbers: Malaysian companies export rubber used for apparels and clothing, surgical gloves, tubes and pipes made of vulcanised rubber among others. Estimated export value in 2024 was $1.6 billion (around RM7.6 billion).

5. Furniture, lighting signs and prefabricated building materials: These included lamps and lighting fitting, illuminated signs and sign plates. Export value in 2024 was estimated at $1.55 billion (about RM7 billion). 

How exactly Trump’s reciprocal tariffs, announced on April 02, will affect these industries remains unclear, given the complexity of trade levies and their varied impact across sectors.

Analysts have been reported as saying there are both potential upsides and downsides, depending on how Putrajaya "negotiates" new terms. 

Still, Malaysia's strong trade ties with the US and its commitment to open and fair trade is going to hurt us. Sure, the Ministry of International Trade and Industry (MITI) say they are already “engaging” with the US to find “solutions”. 

But the fact of the matter is that we're a small country, and that is all we can do. We are at the mercy of the US. And already, there are expectations that the Anwar Ibrahim government would stay neutral even if major economies respond aggressively to Trump’s tariffs, with little likelihood of retaliatory levies. 

FYI, the US accounts for 13.2% of Malaysia's exports. Therefore, we can expect that the 24% levy which is a major step-up from the 2.2% trade-weighted average tariff Malaysian goods currently face when imported into the US, to directly impact the country's export performance. 

Methinks, we should adopt a “minus-US” trade strategy. And it is time to urgently navigate our economy to pivot towards BRICS, if we have not already done so.