Malaysia’s export sector feeling strain as US tariff deadline nears
Industry players say greatest damage may come not from tariff itself, but from deepening uncertainty over trade terms
KUALA LUMPUR, Malaysia (MNTV) — Malaysia’s export sector is showing early signs of strain ahead of a 25% United States tariff set to take effect on Aug 1, as manufacturers report dwindling orders and growing buyer hesitation, reports Channel News Asia.
The US last week raised the tariff rate on Malaysia by one percentage point from 24%. While the increase may appear marginal, industry players said the real cost lies in the escalating uncertainty surrounding trade policy.
Manufacturers told CNA that without clear direction, fewer orders are coming in. Some worry that orders may be rerouted to regional competitors like Vietnam and the Philippines.
“It’s important for manufacturers to see clarity in the way forward, to make our investment decision or even our production planning,” said Jacob Lee, vice-president of the Federation of Malaysian Manufacturers.
“They are also not giving us orders like before. They are giving us smaller orders so as to just cater to their pressing needs.”
While Malaysia’s overall macroeconomic forecasts remain strong, the new US tariff could weigh heavily on growth and profitability across export-driven sectors.
During a press conference on Monday, Investment, Trade and Industry Minister Zafrul Aziz said the country’s trade performance for 2025 remains within expectations and is on track to hit its growth target of 4 to 5%.
Still his ministry expects global trade to moderate in the second half of the year amid uncertainties due to the US tariffs.
Zafrul also told reporters that negotiations with the US are being accelerated as the Aug 1 deadline looms.
These talks follow a meeting between Malaysian Prime Minister Anwar Ibrahim and US Secretary of State Marco Rubio on the sidelines of the ASEAN (Association of Southeast Asian Nations) Regional Forum in Kuala Lumpur earlier this month.
Dual-track approach
Analysts say that Malaysia must now move on two tracks – mitigating short-term shocks and rethinking its long-term trade game.
“This is where you have to double down efforts, not just on the trade and finance and economic track, but also on the diplomatic track,” said Amir Fareed Rahim, director of strategy at public affairs and political risk consultancy KRA Group.
“What is important, in the short term, is the assistance that the government can give to the exporters who are managing this sudden 25% export tariff, so there will be margin pressures on these businesses,” he added.
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