Trump’s latest tariffs to weigh on regional markets, Malaysia’s E&E exports

KUALA LUMPUR: The global financial markets and regional export-reliant economies including Malaysia are bracing for increased volatility following US President Donald Trump’s aggressive tariff rollout effective April 5 and April 9, 2025.

SPI Asset Management managing director Stephen Innes said markets had anticipated some form of trade protectionism but the scale and timing of the announcement caught many off guard.

“From global macro lens, the path of least resistance now looks like further weaknesses across Asian foreign exchange and equities — particularly for export-heavy economies like China, Vietnam, Malaysia, Thailand, and South Korea,” he told Bernama today.

He warned that the new tariffs, if fully implemented without backchannel diplomacy or “eleventh-hour reversals”, could weigh on both US growth and inflation, creating added complexity for Malaysia whose electronics and electrical (E&E) sector is deeply integrated into global value chains.

“The directional bias is clear — risk-off, led by those most exposed to trade flows and the US consumer,” he said.

“The extent of the market reaction depends on each country’s perceived growth impact and how quickly central banks, like Bank Negara Malaysia, respond to the matter,” he added.

Universiti Teknologi MARA (UiTM) Arshad Ayub Graduate Business School (AAGBS) developmental economics professor Tan Peck Leong said Malaysian consumers are unlikely to be directly affected, as the tariffs are imposed on Malaysian goods entering the US, not on American products coming into Malaysia.

“As such, prices of imported US goods such as software, machinery or industrial equipment should remain largely unchanged,” he told Bernama.

However, the impact on Malaysia’s export-driven economy — particularly the E&E sector — could be more pronounced, he said.

“In 2024, Malaysia exported RM249 billion (US$52.5 billion) worth of goods to the US, with about half comprising integrated circuits, semiconductors, broadcasting equipment, and machine parts — items now targeted by the new US tariffs.

“These Malaysian-made components will become more expensive in the American market, potentially reducing our competitiveness and affecting demand,” Tan noted.

Nevertheless, the immediate blow may be softened since the tariffs apply broadly to Asian exporters, he said.

“US companies cannot easily divert their orders to cheaper alternatives like Vietnam or Thailand because those countries are affected too,” he said.

Looking ahead, Tan warned that US companies could eventually seek alternative supply chains or take production back home to bypass tariffs which would pose longer-term risks to Malaysia’s exports.

“To stay competitive, I urged local manufacturers to focus on innovation, quality upgrades, and market diversification.

“Malaysia must remain agile, smart and forward-looking to thrive in the changing global trade landscape,” he added.