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The potential imposition of US tariffs on semiconductor exports poses a significant risk to Malaysia’s trade performance, according to the Asean+3 Macroeconomic Research Office (AMRO). The concern arises as the US, under President Donald Trump’s administration, plans to introduce 25% or higher tariffs on imported semiconductors, among other targeted industries such as automobiles and pharmaceuticals.
Impact on Malaysia:
Semiconductor Industry: Malaysia is a key player in the global semiconductor market, contributing 13% of global semiconductor testing and packaging. It is also the sixth-largest semiconductor exporter worldwide. Any restrictions on semiconductors could disrupt supply chains, significantly affecting Malaysia’s trade balance.
US-China Trade Link: Around 6% of Malaysia’s export value to China ultimately ends up in the US, creating a complex interdependency. Any disruption to trade flows between the US, China, and Malaysia could negatively impact the country's economy.
AMRO’s Outlook:
Known Risks vs Unknown Events: Peh Kian Heng, AMRO’s group head (country surveillance), emphasized that while the risks posed by the semiconductor tariffs are recognized and preparations are in place, “unknown unknowns”—such as unforeseen global events—could have a more significant and unpredictable impact on trade.
Growth Projections: Malaysia’s gross exports are expected to grow at a moderate pace of 5.2% in 2025, slightly lower than the 5.7% growth forecast for 2024. However, the diversified export base and access to multiple international markets are expected to help cushion the economy against external shocks.
Financial Stability:
Market Volatility: Peh warned that financial market volatility would likely persist due to ongoing global uncertainties and interest rate adjustments by central banks. Despite this, Bank Negara Malaysia’s (BNM) efforts to stabilize inflation and promote economic growth should support the ringgit’s stability.
Strong Banking System: BNM Deputy Governor Datuk Marzunisham Omar reassured that Malaysia’s robust banking system and prudent fiscal management, coupled with ongoing economic reforms, would provide long-term economic resilience and stability.
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