KUALA LUMPUR, Nov 7 – Donald Trump’s re-election as the United States (US) President is expected to accelerate the China Plus One strategy, benefitting Malaysia through higher investments and enhanced export potential, particularly in sectors such as electronics, machinery, and palm oil.
Making this prediction, CIMB Securities senior economist Vincent Loo said Trump’s return to the White House solidifies a trajectory of heightened tariffs and protectionist policies, including a proposed 10 per cent tariff on all imports and a specific 60 per cent tariff on Chinese goods.
“With escalating US-China trade tensions, Malaysia could see increased export demand from US companies looking to source products outside China, creating export growth opportunities in high-value sectors,” he said in a research note Thursday.
Loo said foreign direct investment (FDI) in Malaysia is expected to rise as companies seek stable manufacturing bases in the ASEAN region, with the country emerging as a competitive destination owing to its infrastructure and relatively lower production costs.
“However, renewed trade uncertainty may lead to risk-off sentiment in financial markets, prompting investors to seek safe-haven assets, supporting a stronger US dollar and accentuating capital outflows from emerging markets, including Malaysia,” he added.
He noted that increased tariffs on Chinese goods may prompt US companies to shift sourcing from China to Malaysia, increasing demand for Malaysian exports of semiconductors and electronic components.
However, if trade tensions escalate, overall demand might decline, curtailing exports to both the US and China.
Similar to electrical and electronics (E&E) exports, Loo said Malaysia’s machinery and appliance exports stand to gain as the US seeks alternatives to Chinese products.
“However, heightened tariffs and trade barriers could raise costs and reduce global trade demand, impacting Malaysia’s trade volume,” he added.
Meanwhile, Trump’s “America First” energy policy, with an emphasis on boosting US production, could lower global energy prices, diminishing the value of Malaysia’s mineral fuel exports, said Loo.
