United States president Donald Trump has been wreaking havoc on stock markets around the world with his on-again, off-again tariffs.
Malaysia was initially hit with a 24% tariff before Trump hit pause for 90 days, imposing instead a baseline tariff of 10%. Still, many are still worried about the impact this will have on their investments.
Last year, Malaysia’s exports to the US amounted to some RM199 billion, or about 13% of Malaysia’s total exports. If Trump’s tariff is reimposed, some of the local sectors could see a really bad year.
Here are seven sectors that are likely to be impacted the most if Trump’s tariff commences without change. The following uses 2023 data from the Observatory of Economic Complexity.
1. Electrical and electronics
In 2023, the electrical and electronics (E&E) sector exported some US$26 billion (about RM117 billion) to the United States. E&E companies in Malaysia produce and sell goods such as integrated circuits, semiconductor devices, broadcasting equipment, electrical transformers, and batteries.
According to Statista, the E&E industry here generated overall sales of RM600 billion, most of it exported to countries such as Singapore, China, Hong Kong and, of course, the US.
The good news is, semiconductors, which make up close to half of E&E exports to the US, have thus far been exempted from tariffs – but for how long?
2. Machinery, mechanical appliances and parts
The machinery and mechanical appliance sector in Malaysia exported about US$6.5 billion (RM29.3 billion) to the US in 2023, which is about 19% of total exports from this sector to the world.
Not to be confused with E&E, this sector makes and sells machines and mechanical appliances – with electrical and mechanical components pre-assembled within – as well as spare parts. Products include computers, industrial printers, gas turbines, parts for office machines, and air conditioners and pumps.
The US makes up the largest recipient of exports from this sector, followed by Singapore (US$5.6 billion) and China (US$4.7 billion).
3. Optical, media and medical equipment
This sector exported about US$3.6 billion (RM16.2 billion) to the US in 2023, or about 23% of the sector’s total exports. Once again, the States are Malaysia’s biggest client.
This sector exports major items such as oscilloscopes, medical instruments, orthopaedic appliances, thermostats, and chemical-analysis instruments.
Fun fact: Malaysia is the market leader in the oscilloscope industry, encompassing about 17% of the world’s exports. Not bad for a device whose primary purpose is to graphically display electrical signals and show how those signals change over time!
4. Lights and furniture
Some US$1.6 billion (RM7.2 billion) in lights and furniture were exported to the US in 2023, making up 10% of total exports from these sectors.
Malaysia is known for its wooden furniture, especially bed frames, tables, chairs, and kitchen cabinets. These are in high demand from countries such as Singapore, Japan, Canada, and the United Kingdom as well.
5. Rubber products
In 2023, the rubber sector exported some US$1.4 billion (RM1.6 billion) to the US – once again, its biggest client, buying 23% of the sector’s total exports.
It might come as no surprise that the biggest exported product is rubber gloves, which gained popularity during the pandemic.
6. Metals
Metal exports to the US totalled US$1.1 billion (RM5 billion) in 2023, making up 5% of overall exports from the sector. The US is Malaysia’s third-biggest client after China and Singapore.
Metals here include aluminium, iron and steel, copper, tin and zinc. Malaysia’s total exports of aluminium ranks 11th in the world, while iron and steel exports are ranked 24th.
7. Mineral fuels (petroleum)
Mineral fuels come in last on the list, with about US$546 million (RM2.5 billion) in exports to the US in 2023. This makes up a very small share of Malaysia’s total petroleum exports.
Our petroleum sector, of course, is massive, so it will likely not be as badly affected by Trump’s tariff. Malaysia could focus on exporting to countries such as China, Singapore and Japan – already three of the biggest buyers of Malaysian petroleum.
This article was written by Su-Wei Ho for MyPF. To simplify and grow your personal finances, follow MyPF on Facebook and Instagram.
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