The US’ latest tariff may dent Malaysia’s economy and the shock will hit export-driven industries the hardest, RHB Research warned.
Analysis shows the tariffs could shave up to 0.43 percentage point off Malaysia’s economic growth, the research house said in a note. Apart from direct impact, the house said the effect will be felt through spillover from China, weaker US consumer spending, and softer global semiconductor sales.
“We are particularly watchful of developments surrounding US semiconductor tariffs,” RHB Research said, flagging potential “substantial implications” for Malaysia’s export industries.
After unveiling a set of sweeping tariffs on its major trading partners, including 19% on Malaysia, the US has threatened to slap up to 100% levy on imported semiconductors. The US has said the proposed further tariffs are part of its national security investigations.
Malaysia’s semiconductors and integrated circuits exports to the US, valued at US$12.35 billion (RM52.11 billion) in 2024, or about 3% of the country’s gross domestic output, could be in the cross hairs. Still, the US has dangled potential exemptions for companies manufacturing in the US or pledging to do so.
The “structural strengths” in Malaysia’s electrical-and-electronics sector suggest that downside risks “may be contained”, said RHB Research.
“Strong integration into US supply chains — anchored by major players such as Intel and Texas Instruments — implies that significant disruption would run counter to US manufacturing objectives,” the house said.
Nearly two-thirds of Malaysia’s semiconductor exports to the US come from American companies based locally, the house noted, adding that the companies, which already have manufacturing footprint in the US, are likely to secure exemptions and further mitigate the potential impact.
For now, RHB Research is maintaining its forecast for Malaysia’s economy to expand by 4.2% this year with the potential to grow faster at 4.4% with more clarity on US tariff policies, easing US-China trade tensions and domestic stimulus measures.
Malaysia has recently agreed to reduce tariffs on over 98% of US products as well as committed over US$250 billion in purchases and investments to secure a lower tariff. The government has also pledged to ease certain non-tariff barriers.
Source: theedgemalaysia