IN a flare for the dramatic and changing up the signing location of the executive order, US President Donald Trump has drawn a line in the sand and created what is hoped for his external trade policy, a great leverage point on which to pivot the US economy.
Time will tell if it has the desired impact and with all disruptive ideas, history will judge if it was inspired leadership or a misguided policy excursion.
The importance of a strategic response beyond a knee jerk reaction will be critical for Malaysia as trade is just one component of the bilateral relationship with the United States of America.
Recent investment strategies have targeted many US based firms and the United States remains the largest investor into the Malaysian economy.
As on this morning, internal reforms have now become even more important as Malaysia will need to shift its own economy to the next level of productivity to remain competitive.
Some regional competitors have been given a more favourable positions on the tariff spectrum and that may translate into increased inward investments from companies looking to get components of their global supply chains in optimal jurisdictions.
Trade diversification is going to be an obvious idea but that is now going to be everyone’s first choice of least resistance.
That will take us into another competitive scenario, as such, more resources will need to be allocated to external trade promotions. If Malaysia is able out-promote competitors in this game, the great tariff shakeup could actually be an advantage to Malaysian exporters.
This is an opportunity for bold leadership, to summon the courage to step into that breach and to outspend competitors during this time of rapid change.
Beyond the current round of changes, if tariffs don’t do the job quickly enough for the Trump administration, then economic planners need to anticipate what will be put on the table next.
Detailed scenario planning is critical for export exposed companies and industries. The need to manage rapid changes and avoid a broader crisis is still within our own making. – April 3, 2025
Nordin Abdullah is Founding Chairman of the Malaysia Global Business Forum