Malaysia warns US tariffs could halve trade growth as tough semiconductor restrictions loom

The tariff war launched by Donald Trump’s administration may halve Malaysia’s trade growth this year, the trade ministry said on Monday, warning of turbulent times ahead if the US president seeks to swiftly close the nearly US$17 billion trade deficit between the nations.

Governments across Southeast Asia have been bracing for potentially damaging tariffs that could hammer exports of steel, aluminium, cars and semiconductors – as well as China-linked goods – and trigger a fresh, unpredictable restructuring of supply chains.

Malaysia fears US tariffs could harm its key export, particularly semiconductors, raising concerns about economic stability.

Last year, Malaysia’s total trade – imports and exports – grew by 9.2 per cent to a record 2.88 trillion ringgit (US$655 billion), according to data from the Malaysia External Trade Development Corporation.

The target “is at least 5 per cent growth … because of challenges and some assumptions,” Trade Minister Tengku Zafrul Aziz told reporters.

“Should there be tariffs, any new measures by [other] countries or a trade war, there will be an impact.”