The United States’ new “Liberation Day” tariff, announced by President Donald Trump, have placed a 24% import duty on most Malaysian goods entering the U.S., effective 9 April 2025. While semiconductors are exempt, much of Malaysia’s export landscape faces a steep price hike in one of its largest trading destinations.
Below is a closer look at the sectors most vulnerable to these tariffs, followed by additional details on why the U.S. is imposing them, the baseline rates, and what Malaysian businesses can expect next.
Which Malaysian Sectors Are Hit the Hardest?
1. Electronics & Electrical (E&E)
Electronics and electrical goods form a cornerstone of Malaysia’s export economy, encompassing everything from integrated circuits and printed circuit boards to other crucial digital components. While semiconductors, a major revenue driver for Malaysian firms are specifically exempt from the 24% tariff, related electronics products are not so fortunate.
Without the exemption, items like peripheral E&E parts become more expensive for American importers. Malaysian manufacturers might be forced to absorb additional costs or risk losing out to rivals unaffected by the higher duties. Since E&E constitutes a significant share of Malaysia’s exports, the ripple effects could touch a wide network of local suppliers and employees.
2. Machinery & Equipment
Machinery and equipment exports to the U.S. range from air-conditioning units and printing presses to industrial machinery. Valued at approximately US$6 billion (around RM27 billion) in 2024, this sector now faces a 24% tariff, making these products considerably pricier in the U.S. market.
American buyers may either switch to domestic machinery manufacturers or look for alternative foreign suppliers subject to lower tariffs. Malaysian exporters, on the other hand, face immediate decisions about whether to cut margins, seek new markets, or invest in product differentiation to remain competitive under the new cost structure.
3. Medical & Optical Instruments
Another critical sector for Malaysia includes medical and optical instruments, valued at over US$3.89 billion (around RM17.5 billion) in 2024. Products in this category range from surgical tools and dental equipment to diagnostic machines and optical components.
With the U.S. being a leading market for advanced healthcare devices, a 24% surcharge could drive hospitals and clinics to either switch to American-made alternatives or import from nations not subject to similarly high duties. The stakes are high for Malaysian medtech manufacturers that have invested heavily in innovation and quality to meet U.S. standards.
4. Rubber Products
Malaysia has an international reputation for producing rubber gloves, tubing, and a host of other vulcanized rubber goods. In 2024 alone, it exported roughly US$1.6 billion (RM7.6 billion) worth of rubber products to the U.S.
The new tariff threatens to erode Malaysia’s competitive pricing advantage, particularly in the global medical glove market, which surged in demand during and after the COVID-19 period. If American importers decide the elevated cost is too high, they might pivot to domestic producers or purchase from countries facing a lower import duty.
5. Furniture, Lighting, and Prefab Materials
Malaysian furniture, lighting products, and prefabricated building materials, collectively worth about US$1.55 billion (RM7 billion) in exports to the U.S. in 2024, are also set to become more expensive. This segment includes lamps, lighting fixtures, illuminated signs, and modular housing components.
Faced with a 24% markup, importers may look to cheaper foreign suppliers or U.S. manufacturers. As a result, Malaysian producers risk losing some of their foothold in the American market unless they can offset the tariff through cost-saving measures or by repositioning to niche segments that justify premium pricing.
Why Is the U.S. Imposing These Tariffs?
President Trump has long voiced dissatisfaction with countries running large trade surpluses against the U.S., arguing that they exploit the American market. By levying hefty import duties, the White House aims to make foreign goods less competitive on U.S. soil, thus encouraging consumers and businesses to choose “Made in USA” products.
Two key goals underpin this policy:
- Protecting U.S. industries and workers
- Reducing the U.S. trade deficit (the gap between what America buys from overseas and sells abroad)
Malaysia, which exports more to the U.S. than it imports, has become one of the administration’s primary targets under this strategy.
The Basics of the New Tariff
The “Liberation Day” tariffs include:
- Baseline Tariff (10%)
Beginning April 5, a universal 10% tariff applies to nearly all imports entering the United States. - Country-Specific Tariffs
Starting April 9, countries designated as “high risk” due to significant trade surpluses face increased duties. Malaysia is assigned 24%, while some neighbors get even higher rates; Vietnam at 46% and Cambodia at 49%.
By contrast, Canada and Mexico are exempt because of existing trade agreements, and Singapore remains at the baseline 10% due to its smaller trade surplus with the U.S.
Potential Impacts on Malaysia
The abrupt imposition of these tariffs is expected to create short-term pain for Malaysian exporters in the affected sectors. Companies might absorb additional costs to keep customers, cut profit margins, or see buyers migrate to other sources.
Another concern is supply-chain shifts: Some Malaysian firms may explore rerouting goods through countries with lower U.S. duties, a move that comes with strict oversight from American customs authorities. Moreover, nations facing even steeper U.S. tariffs, such as China (34%) and Vietnam (46%), could redirect their goods to third markets like Malaysia, causing local oversupply and downward price pressures.
Meanwhile, the Malaysian government has chosen not to retaliate with its own tariffs. The Ministry of Investment, Trade and Industry (MITI) instead aims to negotiate with the U.S. administration, hoping to secure concessions.
Are There Any Silver Linings?
One notable bright spot is the semiconductor exemption. Semiconductors represent a sizeable portion of Malaysia’s electronics exports to the U.S., so being spared from the 24% tariff offers some relief. Furthermore, if a U.S. importer has been sourcing from a country slapped with an even higher duty, say 40% or more, then Malaysia’s goods might still appear comparatively affordable.
Additionally, ongoing negotiations between the Malaysian government and U.S. trade representatives may yield partial exemptions or a more favorable set of trade terms in the future. Trade conflicts are often fluid, and there is always the possibility of resolution or compromise if discussions progress constructively.
What Happens Next?
The 24% tariff on most Malaysian goods takes effect 9 April, so immediate fluctuations are likely. Some American importers may rush orders before the higher duties apply, while others could cancel or scale back shipments to avoid extra costs. Malaysian exporters will face pricing dilemmas, deciding whether to absorb part of the tariff or pass it on to U.S. buyers.
On the diplomacy front, MITI and other agencies are pursuing talks with Washington, but trade deals can be time-consuming to renegotiate. Other affected countries might consider retaliatory measures, though Malaysia has signaled a more neutral, cooperative approach. In the meantime, businesses could look toward alternative markets to offset any shortfall from reduced U.S. demand.
Ultimately, the extent of the tariffs’ impact hinges on how quickly these issues are resolved and whether other countries facing higher or similar tariffs shift their trade patterns.
Malaysian industries must remain agile, balancing near-term challenges with potential long-term opportunities as global supply chains continue to evolve.
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