Minister warns Trump’s tariffs threaten Malaysia’s chip sector, may stoke global inflation

US president-elect Donald Trump’s policies risk stunting global growth and weakening demand for Malaysian chips, according to Malaysia’s Investment, Trade and Industry Minister Zafrul Aziz.

Zafrul said his primary worry around Trump’s second term as president was the prospect of global inflation accelerating as the US attempts to “reshore” production capabilities and isolate China through higher tariffs. He spoke on a visit to the UK, just three days before Trump’s inauguration.

While he wasn’t immediately concerned about direct US tariffs on Malaysia, Zafrul said he feared the indirect effects of the president-elect’s threat to impose tariffs of up to 60 per cent on imports from China. That could particularly hit Malaysia’s growing electronic chips market, where investment decisions were already being reconsidered.

“The big concern to me would be the whole demand for chips, especially where advancement in AI is so key in driving growth,” Zafrul said. “Investments decisions are now being analysed” amid concerns that higher tariffs and the cost of moving business to the US will lift prices and lower demand. That could prompt underinvestment, he added, which would then hit future supply and push prices even higher.

The country is seeking to be a vital part of the global chips supply chain, having courted investment from the likes of AT&S, Nvidia Corp., Ericsson and Bosch.

Malaysia’s economic growth missed estimates in the fourth quarter, signalling a challenging road ahead as the trade-reliant nation contends with heightened global risks.

  

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