KUALA LUMPUR (April 14): Socio-Economic Research Centre (SERC) executive director Lee Heng Guie has warned against allowing companies to use Malaysia as a base for reshoring or transshipment to bypass US tariffs, which could worsen Malaysia's trade surplus with the US. 

He cautioned that re-batching, re-branding, or labelling goods from other countries as Malaysian-made could lead to trade imbalances and provoke punitive tariffs from the US. This could also harm local small and medium enterprises due to unfair competition.

“If we don’t make efforts to reduce the trade imbalance, they could impose punitive tariffs on Malaysia,” Lee said during a panel discussion at the Bursa Malaysia-ECKL-CIMB Roundtable on “Global Headwinds vs Domestic Resilience: Refreshed Outlook 2025”.

He urged the government to engage with trading partners and improve trade enforcement to avoid such practices, suggesting that Malaysia must implement monitoring systems and certifications to comply with "rules of origin" and reassure the US. 

Lee also highlighted the risk of a surge in imports from major trading partners, which could hurt local industries and negatively impact Malaysia's competitive position in non-US markets.

Currently, Malaysia faces a 24% reciprocal tariff rate from the US, which is lower than other Asean nations like Vietnam (46%) and Indonesia (32%), but higher than the Philippines (17%) and Singapore (10%). 

According to the Ministry of Investment, Trade and Industry, citing data from the US Bureau of Economic Analysis, Malaysia had a US$24.8 billion (RM109.5 billion) trade surplus with the US in 2024. Trade with the US, Malaysia's third-largest trading partner since 2015, saw a 29.9% year-on-year increase, reaching RM324.91 billion last year.

However, China remains Malaysia’s largest trading partner, with trade growing by 7.6% year-on-year to RM484.12 billion in 2024, representing 16.8% of Malaysia's total trade.