Cause for concern: Trump’s recent announcement to hike tariffs on imports from Canada, Mexico and China has caused jitters in the global business community, as higher tariffs could lead to increased costs for goods.
PETALING JAYA: Malaysians can shop to their heart’s content during the festive year-end sales period because any rush to stockpile China-made goods before the US tariffs kick in is unlikely to affect supply in the market.
The threat by US President-elect Donald Trump to hike tariffs on Chinese goods has prompted a rush for some companies in the United States and other parts of the world to stockpile such goods before his inauguration on Jan 20.
Federation of Malaysian Manufacturers president Tan Sri Soh Thian Lai, when asked to comment on the issue, downplayed concerns that the stockpiling rush will severely affect preparations for the upcoming Christmas and Chinese New Year festive seasons.
“Malaysia’s established trade ties with Asean, China, Canada and Mexico provide stability in accessing goods and materials during these critical periods,” he said.
Soh advised local businesses to adopt a strategic approach to inventory management, leveraging trade agreements to ensure sustainable supply chains rather than resorting to overstocking.
Ahead of his return to the White House, Trump has recently vowed to impose a 25% tariff on imports from Canada and Mexico and an additional 10% tariff on imports from China.
This announcement has caused jitters in the global business community, as higher tariffs could lead to increased costs for goods, potentially impacting consumers.
Soh said that while the tariffs may temporarily tighten global supply chains, Malaysia can navigate the effects through the Regional Comprehensive Economic Partnership (RCEP), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the Asean-China Free Trade Agreement (ACFTA).
“Our comprehensive trade frameworks and strong regional partnerships, including the RCEP and CPTPP, place us well to navigate these challenges while enhancing trade with China, Canada, Mexico and other global partners,” he said.
Soh also noted that the tariffs could present new opportunities for Malaysia to fill gaps created by potential disruptions in the North American supply chains.
“The CPTPP, in particular, strengthens Malaysia’s trade connections with Canada and Mexico by providing preferential access to high-demand markets,” he said, adding that this ensures Malaysia can play a pivotal role in meeting global demand.
He emphasised that while the anticipated changes in US trade policy may present challenges, they also offer Malaysia the chance to expand its market presence in North America, China and other key regions.
Malaysia’s participation in the RCEP and ACFTA has already bolstered its trade and investment ties with China, Soh added.
Although short-term price fluctuations may occur for local producers due to stockpiling, he believes these will be manageable due to Malaysia’s diversified sourcing options and access to resources without significant cost pressures.
“Our past experience in adapting to US-China trade tensions has demonstrated that Malaysia can effectively attract investment and expand trade relationships with new partners, including Canada and Mexico,” he said.
Associated Chinese Chambers of Commerce and Industry of Malaysia treasurer-general Datuk Koong Lin Loong said businesses producing lower-end products may stockpile raw materials to safeguard against rising production costs.
“However, higher-margin businesses are less likely to stock up as it could increase holding costs, particularly during this tight cash flow period,” he said when contacted.
He pointed out that small and medium enterprises, which may lack the extra funds to stock up on inventory, could face weaker bargaining power, indirectly pushing up production costs.
Asked about the potential impact of the stockpiling rush on retailers during the coming festive seasons, Koong said it will not have a significant effect as most seasonal festive products have already been in place months ago.
“However, the free market may see some retailers seizing this opportunity to take higher profits at this juncture,” he added.
