PETALING JAYA: With US President Donald Trump celebrating his (second) 100th day in the Oval Office today, economists are of the opinion that a meeting, sooner rather than later, between him and Chinese counterpart Xi Jinping could give global trade a much-needed boost.
This is especially true for smaller economies such as Malaysia, which many experts said is among those “caught in the middle” of the ongoing tariff tug-of-war between the world’s two biggest economies.
That said, with Trump’s stance on tariffs seemingly softening as he mulls over the rationality of his initially proposed rates, it is hoped that Malaysia’s negotiating team, led by Trade, Investment and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz – currently in discussions with Trump’s representatives – will be able to secure a favourable deal.
Economic advisors and industry leaders have offered up varying views about how things may turn out.
Economist Geoffrey Williams opined that Trump is being firm but reasonable.
“There is nothing erratic about his strategies, and they are proving successful with at least 75 countries now focused on reducing trade barriers quickly.
“Those that respond positively, including Malaysia, will see a reduction in reciprocal tariffs as promised on Liberation Day (April 2) and there will be a significant shift toward free trade,” he told StarBiz.
Williams said the reciprocal tariffs are a tactic designed to get countries to the negotiating table, a strategy which has worked well, and one that will likely yield healthier long-term trade relations among all trade partners.
He said this is in addition to helping slow US national debt, which currently stands in excess of US$36 trillion, as the tariffs encourage the relocation of some production back to the United States.
“However, the real benefits will come from the gains in trade among the trading partners of the United States.”
Williams’ viewpoint was echoed by the managing director of a listed tourism entity, who recently told StarBiz that he sees the “chaos” as tactical move by Trump.
He expressed optimism that a discussion between President Trump and President Xi should materialise before the 90-day tariff pause expires.
Labelling the high tariffs against China as effectively a trade embargo, Williams believes that the two nations will soon enter into negotiations to regularise trade, despite the belligerent rhetoric between them that have been publicised in the media.
Meanwhile, Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid opined that the Unites States has valid grounds to complain about international trade practices, especially where protectionist policies are being implemented across various jurisdictions.
“This has been well documented in the US Trade Representative’s report on Foreign Trade Barriers, dated March 31, 2025.
“Hence, the US should resort to the World Trade Organisation (WTO), where trade disputes can be settled through an institution that is globally recognised,” he added.
Mohd Afzanizam argued that by pursuing the WTO route, the United States would command greater respect from countries worldwide, stressing the point that there is a better way to address trade imbalances rather than through unilateral moves that could damage diplomatic ties.
From a more immediate perspective, he noted that consumer confidence and business sentiment in the Unites States are on the decline, suggesting that it would make sense for Trump to reconsider his strategy.
“However, it is quite difficult to make inferences as to how he (Trump) might change his policies. If his objective is to bring all countries into the negotiating table, I suppose he has done extremely well,” remarked the economist.
Mohd Afzanizam said the deeper question is how effective Trump’s plans will be in bringing production back to the United States and how soon the expected positive ripple effect will be felt.
Like many others, he sees mutual benefits in both the United States and China getting along, as both countries, with their respective technologies, economies of scale and, above all, large populations, need each other.
“Both nations ideally should be working together for the betterment of the world.”
Sunway University’s economics professor Dr Yeah Kim Leng noted that the deterioration of the US economy is likely to force Trump to scale back his tariffs.
He explained that with trade between China and the United States grinding to a halt, disruptions to supply chains are causing sharp price increases for the American households.
“More worrying for the United States is the rise in bond yields and dollar sell-off, which could be more destablising to the US economy as (both) investors and the world lose confidence.
Yeah believes that with most local analysts concurring that China apparently holds the upper hand in the tariff war, there is hence a need for a reboot by suspending all tariff increases on both sides and enabling the talks between the two superpowers to kick off.
Of interest, an economist with an international research house said there is a moderate chance Trump could soften his tariff stance toward Malaysia, particularly if Malaysia negotiates concessions like increased US imports or market access during the 90-day pause.
While pointing out that the exemption of semiconductors by the Trump administration and Malaysia’s non-retaliatory approach bolster the case for leniency, she said Trump’s focus on trade deficits and domestic political pressures make a full exemption unlikely without significant trade balance adjustments.
“Malaysia’s diplomatic efforts and ASEAN coordination will be critical, though Trump’s ostensible unpredictability adds risk,” the economist told StarBiz.
Significant economic challenges from the 24% tariff imposed on Malaysia that is currently paused at 10% would include reduced export competitiveness, potential job losses, and slower gross domestic product growth, she added.
Key industries such as electrical and electronics, machinery, and palm oil are most vulnerable, though semiconductor exemptions provide relief.
Nonetheless, the economist recognised Malaysia’s response through diversification, Asean unity, and bilateral talks, although she cautioned that long-term impacts may reshape the country’s trade and investment landscape.
She said the Madani government’s proactive measures and domestic focus aim to mitigate shocks, but sustained uncertainty could weigh on economic sentiment.
“For the latest developments, Malaysia’s trade delegation outcomes and Trump’s post-July 2025 decisions will be pivotal. Monitoring Asean-U.S. negotiations and Malaysia’s trade data adjustments will provide further clarity,” she added.
