Malaysia’s Export Base To Cushion Us Tariff Impact - BNM

KUALA LUMPUR, May 16 -- Bank Negara Malaysia (BNM) expects any impact from potential United States (US) tariffs on semiconductors to be limited for Malaysia, thanks to the country’s diversified export base and continued demand in key sectors.

Governor Datuk Abdul Rasheed Ghaffour pointed out that Malaysia is well-positioned to manage the risks. 

“Malaysia benefited from front-loading of exports as businesses try to avoid higher tariffs, and 32 per cent of our exports to the US are exempted from tariffs, including key products such as semiconductors.

“Besides, our exports tend to be price inelastic, which means that the quantity demanded for our exports will not drastically change in the short term when prices increase due to tariffs. Examples of these products include electrical machinery, computer hardware and optical and scientific equipment,” he said. 

He said this during a press conference on Malaysia’s first quarter 2025 GDP performance, in response to a question on whether the upcoming US sector-specific tariffs on semiconductors would significantly affect the country’s growth and export outlook.

Malaysia's economy expanded by 4.4 per cent in 1Q 2025 compared to 4.2 per cent in 1Q 2024, driven by sustained household spending and supported by favourable labour market conditions as well as government policies.

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However, the growth was slower than the 4.9 per cent growth recorded in 4Q 2024.

Abdul Rasheed added that BNM has already observed some signs of frontloading in electric and electrical (E&E) exports as firms try to soften the impact of tariffs. 

“This underscores the strong underlying demand for E&E products. We expect demand for E&E to continue, supported by Malaysia’s entrenched position in the global value chain and artificial intelligence-related demand,” he said. 

He also revealed that BNM’s engagements with firms suggest that the negative impact from tariffs could be limited in the short term. 

“To complement our data assessments, BNM also engaged firms to collect on-the-ground insights on the tariff impact. These insights suggest that in the near term, less than one-third of surveyed firms expect to be negatively impacted by the tariff measures. 

“However, most firms foresee a limited or even positive impact in the next three months. In some cases, orders have already been secured for the upcoming months, providing a buffer against any immediate disruptions,” he said. 

He added that firms have also confirmed the presence of front-loading activity by their overseas clients, as observed from the macro data, noting that inventory building by these clients has led to a surge in demand for Malaysia’s exports. 

Additionally, Abdul Rasheed noted that tourism would also continue to play a significant role in the economic outlook for this year. 

Improved flight connectivity, the extension of visa-free policies and promotional efforts leading up to Visit Malaysia Year 2026 are projected to boost both tourist arrivals and receipts, he said.

“Of course, we remain vigilant to downside risks, particularly from higher trade restrictions and potentially weaker income and demand for international tourism, affecting Malaysia’s goods and services exports,” he added. 

-- BERNAMA