Malaysia reiterates its commitment to its 2025 trade growth target in the face of escalating trade tensions with the US over new tariff actions.
The country’s Investment, Trade and Industry Minister, Zafrul Aziz, also said the ministry expects trade to grow by 4% to 5% this year, despite global economic uncertainties and the threat of tariffs weighing on outlooks.
Zafrul noted that Malaysia’s exporters were adapting quickly, noting that front-loading had already taken place and was expected to continue ahead of the August 1 deadline, when another round of higher US import duties was set to take effect.
The government’s tough stance amid potential economic headwinds tells a powerful tale: Malaysia will continue to be a competitive and trusted trading nation in the region, even when forced against the wall.
Malaysia’s exports fall ahead of US tariff deadline
Although the outlook appears rosy, new trade figures revealed some chinks in Malaysia’s export growth.
Exports declined in May 2025 for the first time since September 2024, indicating a potential rocky road ahead. The contraction has added to worries about Malaysia’s exposure to changes worldwide, such as a less open trade policy by the US, one of its biggest trading partners.
At the start of May, the White House had already announced plans to slap a 24% levy on a long list of goods, including semiconductors, electronics, parts, crude palm oil, and other goods. But the rate was also increased, more quietly, to 25%, adding pressure on Malaysia to respond somehow.
Should the levies go ahead, as an export-oriented country, Malaysia’s overall market share within the region could potentially be at peril. Zafrul said his ministry will “closely monitor the spill-over effect” and prepare exporters to “put in place short-term and long-term measures” if US taxes persist.
Some exporters have already rushed to ship their goods before the August 1 deadline, aiming to beat the incoming tariffs. While this surge may temporarily boost current trade figures, analysts warn it could lead to a decline in the coming months as shipment volumes normalize or drop.
US tariff talks put Malaysia’s economic sovereignty to the test
As the deadline nears, Malaysia is making a diplomatic push to cushion or dodge the harshest tariffs. The United States seeks to eliminate caps on majority ownership in various Malaysian industries.
Washington pushed for a far-reaching liberalization of key sectors, according to Zafrul. He said the government consulted other parties to consider whether the country could liberalize these sectors.
For foreign ownership, Malaysia caps all strategic areas and categories like logistics, telecommunications, retail, and oil & gas.
However, the US wants Malaysia to tear down these barriers in return for tariff relief or trade deals. This move could be politically catastrophic and economically disruptive if not handled carefully.
The government is not against liberalization, but it would need to be strategic and inclusive for the country’s good in the long run, Zafrul said. He said discussions were not being had for the sake of having discussions, but to make sure any changes fit the context of our industrial aspirations, and that there is harmony in society.
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