HLIB Expects Malaysia To Withstand Impact Of US Trade Tensions

KUALA LUMPUR, Feb 17 (Bernama) -- Hong Leong Investment Bank (HLIB) expects Malaysia to withstand the impact of renewed US trade tensions even as President Donald Trump moves to reintroduce tariffs. 

In a research note today, HLIB said although Trump has introduced new tariff measures, including an already-effective 10 per cent tax on Chinese imports, Malaysia and other ASEAN nations could benefit from the trade diversion, similar to trends seen during his first 2017-2021 term in office.

During Trump’s first term, ASEAN nations, particularly Vietnam, benefited from the US-China trade war, with Vietnam’s exports to the US growing at a compound annual growth rate (CAGR) of 15.9 per cent. 

“Malaysia also saw notable gains, with a CAGR of 4.6 per cent then,” HLIB said.

Similar trade shifts could reemerge, creating opportunities for export-driven Asian economies with Trump 2.0 and his new 10 per cent tariff on Chinese imports, it said.

”Industries to potentially benefit include toys, sporting goods (with 66.5 per cent of US imports dependent on China), and cell phones and appliances (57.3 per cent),” HLIB said.

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It estimated the US-Malaysia overall tariff gap of 2.3 per cent only with potential reciprocal tariffs based on a simple average tariff gap metric, indicating no substantial imbalances.

“For now, we maintain our 2025 GDP growth at 4.9 per cent, driven by strong domestic demand drivers,” it said. 

Given Trump’s unpredictable trade stance, however, the risk of a blanket 10 per cent universal tariff remains possible, it said.

The 2018-2020 US-China trade war led to a notable decline in Chinese exports, underscoring the role of trade elasticities in shaping trade flows.

“Hence, hypothetically, if Trump imposes a 10 per cent global tariff and a lower trade elasticity of 0.7 is applied, Malaysia could see a decline of 0.5 per cent in GDP, with the impact potentially rising to 1.6 per cent over time if trade elasticity strengthens,” it said. 

While global trade tariff measures pose potential risks, Malaysia remains on a stable growth trajectory, supported by domestic economic resilience, it concluded.

-- BERNAMA