Malaysia must navigate US tariff shocks with strategic diversification, ASEAN solidarity, and civic resilience— balancing economic pragmatism with historical diplomacy in a shifting global trade landscape
By Dr Mohd Safar Hasim, Malaysian Press Institute (MPI)
When Investment, Trade and Industry Minister Tengku Zafrul Abdul Aziz announced that the ASEAN Economic Council will convene in October to address the implications of new US tariffs, he signalled more than a routine policy response.
He signalled a moment of reckoning—not just for Malaysia, but for ASEAN’s collective economic future.
The United States, under President Donald Trump’s revived “America First” doctrine, has imposed sweeping tariffs ranging from 10% to 100% on a wide spectrum of goods that form the backbone of ASEAN’s export economy. These include semiconductors, pharmaceuticals, automotive components, furniture, and electronics. Malaysia alone stands to lose an estimated RM11.6 billion in export earnings. Vietnam’s projected losses exceed US$64 billion. These figures are not abstract—they represent jobs, supply chains, and strategic futures.
ASEAN–US Trade Snapshot
In 2024, ASEAN exported over US$250 billion worth of goods to the United States. Key contributors included:
* Vietnam: US$142.5 billion in exports (electronics, garments, furniture)
* Malaysia: US$42.6 billion (semiconductors, aerospace parts, palm oil)
* Thailand: US$31.4 billion (vehicles, electronics, seafood)
* Singapore: US$23.8 billion (pharmaceuticals, electronics)
* Indonesia: US$18.9 billion (footwear, textiles, palm oil)
Imports from the US totalled over US$110 billion, dominated by:
* Aircraft & aerospace components: US$12.5 billion
* Agricultural goods: US$9.8 billion (soybeans, wheat, cotton)
* Medical devices & pharmaceuticals: US$7.3 billion
* Machinery & engines: US$15.6 billion
* Defence & digital tech: US$5.2B
These flows reflect deep industrial interdependence. Malaysia’s semiconductor exports alone—valued at RM60.6 billion—are vital to US tech supply chains. Conversely, Malaysia imports critical medical instruments and agricultural inputs from the US, supporting domestic healthcare and food security.
Malaysia’s Dilemma: Between Dependence and Defiance
Malaysia’s trade architecture has long been built on openness, multilateralism, and strategic hedging. Our semiconductors power global devices. Our aerospace components support international aviation. Our pharmaceuticals serve both domestic and global health needs. Yet these very strengths now expose us to tariff vulnerability.
Can Malaysia—and ASEAN—call Washington’s bluff and pivot elsewhere? Theoretically, yes.
Practically, it’s complex.
The US remains one of ASEAN’s top three trading partners. Its consumer market offers premium mmargins. Its firms are embedded in our industrial ecosystems. A sudden disengagement risks economic shock and geopolitical fallout. Moreover, ASEAN’s consensus-based diplomacy makes unified retaliation difficult.
Strategic Alternatives: Quiet Defiance, Not Loud Rejection
Rather than confrontation, Malaysia must pursue quiet defiance—strategic, measured, and historically grounded.
First, we must diversify our export markets. The Regional Comprehensive Economic Partnership (RCEP) offers tariff-free access to China, Japan, Korea, and Australia. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) opens doors to Canada, Mexico, and Peru.
South-South partnerships with the Middle East, Africa, and South Asia can absorb displaced exports, especially in halal pharmaceuticals, palm oil, and electronics.
Second, we must strengthen domestic value chains. Reducing reliance on US-bound components by incentivising local production of semiconductors, aerospace parts, and pharmaceutical ingredients is essential. SMEs must be equipped to meet EU and regional standards, enabling market substitution.
The pivot to ESG-compliant manufacturing and digital exports—such as healthtech and edutech—can open tariff-safe niches.
Third, Malaysia must leverage ASEAN platforms to present a coordinated front. Tengku Zafrul’s call for an October ministerial meeting is timely. ASEAN must reaffirm its commitment to WTO principles and rule-based trade, resisting unilateralism. Joint ministerial action can amplify ASEAN’s voice in global forums and strengthen negotiation leverage.
Fourth, we must attract foreign direct investment (FDI) by positioning Malaysia as a tariff-safe hub for US and EU firms seeking to relocate supply chains. MITI’s Industry Coordination Division can fast-track approvals and offer incentives. Export insurance schemes through MATRADE can protect vulnerable sectors. Digital trade corridors must be promoted to bypass traditional tariff-heavy routes.
Civic Engagement: From Policy to Public Consciousness
This moment also calls for civic education. Youth must understand the stakes of global trade. SMEs must be equipped to adapt. Civic platforms like the Malaysian Press Institute (MPI) can play a vital role in translating trade policy into public literacy. Public discourse must move beyond technical jargon to strategic storytelling—rooted in Malaysia’s historical resilience and diplomatic foresight.
Malaysia’s historical commitment to non-alignment and trade diplomacy—echoing Tun Razak’s pragmatism and Mahathir’s South-South advocacy—offers a blueprint. We need not shout to be heard. We need only act with strategic clarity.
Tengku Zafrul’s statement is not just a ministerial note—it is a call to action. Malaysia must respond not with panic, but with purpose. Not with isolation, but with innovation. And not with silence, but with strategic voice.
In the face of tariffs and tensions, Malaysia’s path forward lies not in confrontation, but in recalibration. The world is watching—not just how we react, but how we lead.
(The views expressed here are entirely those of the writer)
WE