This article first appeared in Forum, The Edge Malaysia Weekly on May 12, 2025 - May 18, 2025
Some say the US’ sweeping tariffs and increasingly protectionist stance are aimed at achieving long-term economic security, while others argue they serve strategic geopolitical interests. At its core, however, President Donald Trump’s “America First” agenda has centred on reviving “Made in USA”, fuelled by political promises to restore American jobs and re-establish industrial might. The push to bring manufacturing back home has understandably struck a chord with many who feel left behind by globalisation’s sweeping changes.
However, beneath the headlines and tariff battles lies a more complex economic reality. Does physically bringing factories back to American soil — especially through blanket policies that overlook the strategic value of specific sectors — truly represent the right industrial policy direction for the US? Or is this focus on reshoring a costly distraction from the deeper challenge of capturing value in a globalised economy?
Malaysia’s recent policy focus seems to reflect a better grasp of current economic realities and is charting a markedly different course from the US. Rather than emphasising “Made in Malaysia”, the country is championing a strategy of “Made by Malaysia” — nurturing home-grown companies that own intellectual property and command the high-value segments of global supply chains, whether production happens locally or abroad. This reflects an understanding that in today’s interconnected world, economic strength comes not from where things are made, but from who owns the knowledge, the brand and the innovation behind them.
First, consider why the US reshoring drive, while politically popular, may miss the bigger picture.
The appeal of reshoring manufacturing to the US is undeniable, especially in regions where factory closures have left communities struggling. The Trump administration capitalised on this sentiment, promising to bring back millions of jobs and restore American industrial dominance. However, such hopes seem misplaced, given broader trends where automation and digitalisation continue to reduce labour demand. Even if factories return, job creation will likely be minimal, as companies increasingly automate to minimise labour costs. This was evident during Trump’s first-term trade policies, which did little to spur manufacturing jobs as data show no significant rise in manufacturing employment beyond existing trends. Forced reshoring also risks fragmenting global value chains, raising consumer prices and inviting retaliatory measures from trading partners.
Moreover, the economic rationale for offshoring remains compelling. US companies typically achieve notable cost savings by manufacturing overseas, enabling them to maintain competitive pricing and higher profit margins. While offshoring can lead to job losses in certain sectors, the overall economic value created disproportionately accrues to the US through higher profits, innovation and the redeployment of labour into higher value-added activities such as research and development, marketing and global distribution.
It is, therefore, not inaccurate to say that the US has benefited greatly from globalisation. The real problem likely lies in the distribution of these gains, which have disproportionately accrued to capital owners rather than displaced manufacturing workers. The challenge is not simply where goods are made, but how the benefits of globalisation are distributed and reinvested domestically to ensure that displaced workers and communities can transition and thrive in the new economy.
In contrast, Malaysia has adopted a more nuanced and strategic approach to globalisation. By focusing on ownership of knowledge and innovation rather than merely hosting factories, Malaysia captures a greater share of the value created by its economic activities. This approach also provides flexibility: Malaysian companies can choose to manufacture domestically or overseas, depending on what is most cost-effective and efficient, without sacrificing control over the high-value segments of their businesses.
The contrast between the US and Malaysia’s strategies is stark. The US reshoring effort centres on repatriating manufacturing jobs and physical factories, often at higher operational costs and with limited economic upside. Malaysia prioritises cultivating domestic firms that own the intellectual property and innovation driving production, regardless of where manufacturing actually takes place.
In essence, the future of economic competitiveness lies not in the physical location of factories, but in who controls the intellectual property, innovation and branding the high-value segments of the supply chain that generate sustainable profits and economic growth. Ultimately, the debate should move beyond geography to focus on ownership and value capture. The question is no longer just “where is it made?” but “who makes it?” — and “who benefits?”
As the global economy becomes ever more interconnected, the traditional notion that economic strength depends on the location of factories is increasingly outdated. For policymakers seeking sustainable growth in a globalised economy, the lesson is clear: Cultivate local intellectual capital first, and let production follow where it makes the most sense. At the same time, and importantly, Malaysia must avoid the same oversight as the US by ensuring that the value created from globalisation is proportionately distributed across society.
Woon Khai Jhek, CFA is a senior economist and head of the Economic Research department at RAM Rating Services Bhd
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