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THE 90-day suspension of tariffs between the United States and China presents Malaysia with a pivotal opportunity to reposition itself in the global trade landscape, economists have said, urging the country to act swiftly and strategically to enhance its economic resilience.
Following breakthrough talks in Switzerland—the first since US President Donald Trump imposed sweeping tariffs on 2 April—the US and China have agreed to slash their respective import duties by a combined 115 percentage points. Under the deal, the US will cut its tariffs on Chinese goods from 145 per cent to 30 per cent, while China will reduce its tariffs on American products from 125 per cent to 10 per cent.
Bernama cited Dr Mohamad Idham Md Razak, senior lecturer at Universiti Teknologi MARA’s Department of Economics and Financial Studies, said Malaysia must seize this window of relative stability to broaden its trade engagements and reduce its dependence on US-China trade flows.
“Malaysia should deepen ASEAN-led partnerships through the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP),” he said. “This is essential to shield the economy from the volatility of superpower rivalries.”
He also recommended that Malaysia attract foreign firms seeking to diversify their supply chains, particularly in high-value sectors like semiconductors and renewable energy.
“Malaysia should enhance export competitiveness while advancing domestic reforms to position itself as a regional production hub through improved business operations, digital infrastructure, and workforce development,” he said.
Dr Idham stressed the need to stay alert to geopolitical risks and plan for possible disruption.
“Firms must develop contingency strategies to address potential US-China decoupling scenarios by exploring new export markets and creating supply chain buffers. A proactive approach will help Malaysia manage trade uncertainties and seize emerging global opportunities.”
He added that the truce could offer a short-term boost to sectors such as electronics, agriculture, and manufacturing. However, he cautioned that it does not guarantee lasting stability without meaningful concessions on both sides.
“Malaysia should remain vigilant, as the end of the truce could lead to renewed trade tensions, disrupting regional exports and investment flows.”
Echoing this view, Dr Carmelo Ferlito, chief executive of the Center for Market Education, said Malaysia should respond by actively negotiating new free trade agreements (FTAs) with a range of global partners.
“Malaysia should avoid taking sides in the ongoing trade tensions and instead focus on advocating clear, consumer-benefiting free trade policies that foster innovation,” he said.
“This is an opportunity to pursue FTAs not only to lower tariffs but also to address non-tariff barriers such as regulations and quotas that hinder trade.”
Dr Ferlito added that the pause in hostilities sends a strong and positive signal for global negotiations.
“Trump shook the table and now the players are about to sit down for a new round of cards, trying to define new rules. Trump was not aiming at tariffs per se but at pushing other countries to negotiate with him to reshape global trade.”
Meanwhile, Lee Hwok Aun, senior fellow at the ISEAS–Yusof Ishak Institute’s Malaysia Studies Programme in Singapore, noted that while tariffs have been reduced, the new 30 per cent US tariff on Chinese goods remains significant.
“It is unclear whether this reprieve will avert a US recession and wider global contagion,” he said. “The truce reflects domestic pressures in both the US and China.”
Lee advised that Malaysia and its Southeast Asian neighbours should proceed cautiously in their trade negotiations.
“Countries negotiating trade deals, especially Malaysia and its Southeast Asian neighbours caught in the US-China rivalry, should proceed tactfully and bide their time while awaiting greater clarity on the direction and substance of US-China negotiations.” - May 14, 2025