Malaysia aims to counter trade decline with the United States
In the aftermath of global economic challenges and recent trade tensions, Malaysia and the United States are making significant strides to strengthen their economic ties. Both nations are actively engaged in trade negotiations, aiming to resolve a contentious 24% tariff imposed on selected Malaysian exports, with the goal of removing these tariffs by July 8, 2025.
Currently, Malaysia's exports to the U.S. are on an upward trajectory, growing by 16% year-on-year, marking the eighth consecutive month of double-digit growth. This growth is primarily driven by electronics, processed food, machinery, and equipment exports. Despite a dip in overall exports earlier in the year, particularly in petroleum product shipments and exports to China and Japan, the country's trade surplus remains strong. In March 2025, Malaysia reported a MYR 24.7 billion (approximately USD 5.3 billion) surplus, with a Q1 surplus of MYR 41 billion, indicating a healthy trade performance despite global uncertainties.
The electrical and electronics (E&E) sector, a critical component of Malaysia's export economy, continues to perform well, with a 7% year-on-year increase in exports during May 2025. This sector's growth is crucial for maintaining the positive trajectory of Malaysia's external trade.
Looking ahead, the successful resolution of the tariff dispute by mid-2025 is expected to significantly stabilize and potentially boost Malaysia's export-driven sectors, especially technology and manufacturing. This would likely enhance investor confidence and attract multinational investments, fostering economic growth.
Malaysia's economy is forecasted to remain robust in 2025, supported by resilient consumer demand, strategic international investments, and a thriving labor market. The sustained growth in exports to the U.S., coupled with government initiatives, underscores a positive outlook despite external market uncertainties and global economic challenges.
The trade talks and their successful conclusion could catalyze sectorial rallies, particularly in manufacturing and technology industries, helping Malaysia to better navigate ongoing global economic pressures following the crisis.
In addition to these developments, a number of Malaysian companies are seeking to establish a presence in the United States. Last year, US investments in Malaysia totaled US$13.5 billion and created jobs for 158,000 people. However, countries doing business with America are anxious about potential changes in US policies during its rebuilding process.
Prime Minister Datuk Seri Najib Tun Razak has emphasized the need for the United States to continue engaging the rest of the world as it faces the economic crisis. In a globalized world, it would be a mistake for any country, including the U.S., to think it could succeed by going it alone. Najib has also highlighted recent economic policy reforms aimed at transitioning Malaysia from a middle-income to high-income growth.
In 2006, Malaysia was the United States' 10th largest trading partner, but in 2009, it dropped to 18th place due to a 23% trade volume shrinkage from 2008 to 2009. However, Najib hopes these investments will continue in the future, restoring trade with the United States to previous high levels.
The prime minister met with Congressman Howard Berman, chairman of the foreign affairs committee, earlier yesterday, and later attended a lunch hosted by Congressman Berman on Capitol Hill. Some Malaysian companies have already set up branch offices, bought real estate, or become joint venture partners with US firms in the United States.
In conclusion, while Malaysia faced export challenges in early 2025, trade relations with the U.S. show strong growth, particularly in electronics and machinery. The imminent resolution of tariff issues by mid-2025 is poised to further enhance bilateral trade, contributing to Malaysia’s broader economic resilience and growth trajectory in the post-global economic crisis period.
- The significant strides being made by Malaysia and the United States to strengthen their economic ties, aiming to resolve the 24% tariff on selected Malaysian exports, could potentially boost Malaysia's export-driven sectors, particularly technology and manufacturing, thus fostering business growth and investment within finance.
- In the globalized world, the ongoing trade talks between Malaysia and the United States, with the goal of removing tariffs by July 8, 2025, are not only crucial for the overall growth of Malaysia's export economy, but also signify a strategic move in the realm of politics, as both nations seek to navigate ongoing global economic pressures and maintain stable business relationships.
