Angeline Tan was quoted in South China Morning Post, 7 April 2025
President Xi Jinping’s coming visit to Malaysia, Cambodia and Vietnam has turned attention to China as a potential economic stabiliser
By Joseph Sipalan
Malaysia warned on Monday of a “mid-to-long-term impact” from the US tariff increase as the country risked facing a slowdown in its exports to the world’s biggest economy and inbound investment.
Amid the global trade and market turmoil over Washington’s tariffs, Chinese President Xi Jinping’s coming visit to Malaysia as part of his regional tour has assumed greater significance over China’s perceived role as an economic stabiliser, according to analysts.
Tariffs of between 24 per cent and 49 per cent are set to be imposed by the US on more than half of the Association of Southeast Asian Nations’ (Asean) 10 members from Wednesday, following President Donald Trump’s announcement last week of sweeping levies that have upended global supply chains and triggered fears of a recession.
A 10 per cent universal rate for the rest of the world came into effect on Saturday.
Semiconductors – a key Malaysian export category – are exempted under the latest tariff regime. But the Malaysian government has warned that they only account for 30 per cent of the country’s total electrical and electronics exports to the US.
“Semiconductors are Malaysia’s largest export category to the US. But many other sectors will be hit, such as machinery and equipment, furniture, rubber and plastics,” Trade Minister Tengku Zafrul Abdul Aziz told a news conference broadcast on national television.
While the 24 per cent tariff rate on Malaysia might be “moderate” compared with some of its Asean neighbours, Trump’s tariff plan would have a chilling effect on global supply chains that would invariably hit output across all markets, Zafrul said.
“We cannot deny the fact that a global slowdown will have an effect on Malaysia. If there is an impact on global growth, it will also impact on Malaysia. Looking at the current tariffs imposed, businesses will be affected and jobs will be affected,” Zafrul said.
Zafrul warned that there would be a “mid-to-long-term impact” from the tariff given that Malaysia was one of the US’ largest trading partners in Asean, and one of the major recipients of American investments.
Ahead of Xi’s planned tour of Cambodia, Malaysia and Vietnam, Southeast Asian countries are rushing to join the growing line for negotiations with the US over its tariffs.
The Chinese leader is scheduled to arrive in Malaysia on April 16 for a three-day visit, according to two Malaysian government sources.
“Xi’s visit will be important in signalling how China is prepared to move forward with regional partners to uphold economic stability,” said Angeline Tan, an analyst with the Institute of Strategic and International Studies (Isis) Malaysia.
Cambodia has been slapped with the highest tariff of 49 per cent among its Asean peers, followed by 48 per cent for Laos, 46 per cent for Vietnam and 44 per cent for Myanmar. Thailand has been hit with a 36 per cent tariff while Indonesia faces a 32 per cent levy.
Zafrul said Malaysia – which chairs Asean this year – had called for a meeting with Asean economic ministers on Thursday to find a common position on US tariff engagements while also working on bilateral negotiations with Washington by the end of the month.
On Monday, Malaysian Prime Minister Anwar Ibrahim called for Asean’s unity in the wake of the US tariffs.
“We must stand firm together as Asean – with a population of 640 million and an economic strength that is among the top in the world,” Anwar said at a meeting of his department staff.
Up to 50,000 Malaysian jobs are at risk if the government does not act swiftly to negotiate relief or exemptions from the US tariff, according to a statement by the Malaysian International Chamber of Commerce and Industry issued on Friday.
Thailand on Sunday announced plans to increase imports of US energy, aircraft and agricultural products as part of an attempt to negotiate a lower tariff.
Vietnam on Friday said its leader To Lam had pledged to cut levies on US goods and that he and Trump had agreed to continue talks “to soon sign a bilateral agreement” on tariffs.
Global markets have suffered a plunge in recent sessions following Trump’s “Liberation Day” tariffs.
China, which now faces a cumulative levy of 54 per cent, on Friday announced an additional tariff of 34 per cent on US goods and export curbs on some rare earths.
The European Union will this week pursue an initial set of countermeasures on up to US$28 billion worth of US exports to the bloc, ranging from meat and clothing to dental floss and toilet paper.
Zafrul said the tariff meant Malaysia, along with the rest of Asean, had little choice but to accelerate free trade negotiations with other markets like the EU while exploring other markets such as the Middle East, Africa and South America.
Experts expect Xi to push for deeper trade and investment integration between China and Southeast Asia during his tour, likely through the Regional Comprehensive Economic Partnership (RCEP) and Asean-level platforms like the Asean-Gulf Cooperation Council-China summit scheduled for later this year.
This would likely cut across the digital economy, automotive and aerospace sectors, green energy, currency exchange deals and infrastructure projects, said Lam Choong Wah, an international relations expert with Universiti Malaya.
Lam said Trump’s tariffs were pushing a “convergence of interests with China” in Southeast Asia over the short term, adding that bilateral and multilateral collaboration was critical to mitigating the fallout from the levies.
“To effectively counter the [Trump] administration’s divisive strategies, a unified Asean-China approach is essential, as individual actions will be less impactful,” Lam said.
But Asean members would still need a strong US presence to ensure continuous stability and security of the region, said Tunku Mohar Mokhtar, a geopolitical analyst from the International Islamic University of Malaysia.
“The potential biggest risk is regarding the US presence in the region, which might be affected if the US loses its interests in view of the potential regional tilt to China,” Tunku Mohar said.
“Asean still needs the US presence in the region to counterbalance China’s power.”
Additional reporting by Agence France-Presse and Bloomberg
This article first published in South China Morning Post, 7 April 2025
