Economist Geoffrey Williams said given the current average tariff on US imports of 5.6%, there is room for Malaysia to lower its tariffs.
PETALING JAYA: A transparent approach to trade data with the United States is crucial to address the disparity between exports and goods tied to American supply chains.
SPI Asset Management managing director Stephen Innes said Malaysia should adopt a strategic move that reframes the numbers to mitigate growing concerns in Washington about the bilateral trade imbalance.
“Much of Malaysia’s trade surplus with the United States stems from the operations of American multinationals based in Malaysia – particularly in high-tech sectors,” he told StarBiz.
He added the trade figures often mask the integrated value chains where US intellectual property, capital, and upstream components are embedded in Malaysian exports.
“A more transparent approach to value-added trade data could help differentiate between true Malaysian exports and goods tied to American supply chains.”
In 2024, bilateral trade between Malaysia and the United States reached RM324.91bil, marking a 30% increase from the previous year and accounting for 11.3% of Malaysia’s total trade.
The electrical and electronics sector particularly made up 60% of Malaysia’s exports to the United States, with semiconductors representing over 20% of this segment.
Similarly, imports from the United States surged by 42.1% to RM126.26bil, resulting in a RM72.39bil trade surplus for Malaysia in 2024.
This growth continued into this year.
For the first two months of 2025, Malaysia’s trade with the United States rose 28.9% to RM55.85bil compared with the same period in 2024.
Exports saw double-digit growth, rising 28.5% to RM34.76bil, while imports from the United States increased by 29.4% to RM21.1bil. This resulted in a trade surplus of RM13.66bil for Malaysia.
While Malaysia-US bilateral trade is on an upward trend, Innes suggested Malaysia try to rebalance the relationship by increasing imports of US goods in areas prioritised by Washington, such as clean energy, advanced manufacturing equipment and agriculture.
However, he acknowledged agriculture could be a challenging area for Malaysia.
Economist Geoffrey Williams said given the current average tariff on US imports of 5.6%, there is room for Malaysia to lower its tariffs.
But, he cautioned that doing so could lead to a loss in revenue from US imports, as the current tariffs generate billions of ringgit.
Williams emphasised that non-tariff barriers and other trade restrictions, including preferential purchasing arrangements for Malaysian companies – especially government-linked companies – remained a bigger issue.
“Once these are addressed, Malaysia can present a clear offer for the immediate and scheduled removal of trade barriers to secure a negotiated reduction in reciprocal tariffs,” he said.
Beyond numbers, Innes said the broader strategy should be to deepen Malaysia’s positioning within the Indo-Pacific framework – not just as a trade partner, but as a reliable co-investor in future-facing sectors.
“Green tech, artificial intelligence and advanced manufacturing hubs aligned with US strategic goals will offer a natural pathway toward mutual value creation and derisking supply chains,” he said.
He added that the semiconductor space offers a particularly strong opportunity.
With chips excluded from reciprocal tariffs, he said Malaysia has a chance to elevate its role in the global ecosystem.
“Already a global leader in testing, assembly, and packaging, Malaysia is deeply integrated with US firms. The next step is to solidify this by positioning itself as a politically stable, cost-effective, and trusted alternative to China-centric manufacturing.
“The focus should be on moving up the value chain – upgrading sustainable standards, exploring front-end capabilities, and becoming a strategic cornerstone in the US-led semiconductor supply chain.
“In short, Malaysia has an opportunity to shift the narrative from a narrow trade imbalance to a forward-looking partnership grounded in shared value, resilience and strategic alignment,” Innes said.
Kenanga Research’s recent ground checks found a majority of firms expecting reciprocal tariffs to persist.
“Margin pressure is a concern but it exists in small pockets.
“A silver lining is that some firms are perceiving the tariff differential as an advantage in securing new customers, which reinforces our view of Malaysia being a relative beneficiary in the region,” the research house said.
It noted that some segments in the technology sector, specifically electronics manufacturing services segment players, are seeing improved customer inquiries amid the tariff jitters.
Similarly, glovemakers are seeing opportunities amid the weak market sentiment.
“Our checks reveal selected consumer firms could gain from improved bargaining power, with goods sourcing from China,” it noted.
Kenanga Research added that domestic sectors insulated from tariff risks include telecommunications, utilities, and healthcare.
Investment, Trade, and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz will be leading a trade and investment mission to the United States with the aim of reassuring US policymakers about the mutual benefits of the Malaysia-US trade relationship.
