KUALA LUMPUR (Feb 23): US tariff uncertainty is expected to remain a key overhang for markets in the near term, despite the US Supreme Court’s decision to strike down tariffs imposed under the International Emergency Economic Powers Act (IEEPA), analysts said.
In separate strategy notes, analysts said the ruling does not mark a clear turning point for Malaysian equities as the new tariffs have already been introduced under a different legal provision.
“In our opinion, Trump is unlikely to relent and seek other alternatives to assert tariffs, which were the centrepiece of his foreign policy,” said Public Investment Bank (Public IB) in its note.
After the court ruled against tariffs imposed under the IEEPA, US President Donald Trump introduced fresh global tariffs of 10% under Section 122 of the 1974 Trade Act, with plans to raise them to 15%, the maximum allowed under that provision. These tariffs can only remain in place for up to 150 days unless approved by Congress.
Kenanga Investment Bank said the latest development could be marginally positive for Malaysian equities from a risk-reward standpoint, as the new tariffs are capped at 15% and valid for up to 150 days unless extended by Congress. However, it cautioned that US officials have indicated that tariff revenues are expected to remain broadly unchanged, suggesting that protectionist measures will continue in some form.
Public IB noted that uncertainty also surrounds whether tariffs amounting to over US$130 billion in the current fiscal year collected under IEEPA will be refunded. It said any repayment process would likely be legally complex and time-consuming, with numerous companies having filed lawsuits.
On Malaysia’s positioning, both research houses said the country is unlikely to emerge as a clear regional winner.
Although the new global tariff rate of up to 15% is lower than the earlier 19% cited for Malaysia, Kenanga said an existing reciprocal trade arrangement, which has been agreed but not ratified, could lead to the 19% rate remaining in place for now.
It added that while several Asean countries had faced higher reciprocal tariffs previously, Malaysia’s trade surplus with the US is smaller than that of Vietnam and Thailand, limiting the relative upside.
Sectorally, Public IB said exporters such as glove makers and certain manufacturing players could benefit if tariff rates ease. It added that the impact on Malaysia’s technology sector should be limited, as semiconductors and electrical and electronics products are already exempt from US tariffs.
Public IB’s top picks for exporters include VS Industry Bhd (KL:VS) and SKP Resources Bhd (KL:SKPRES), and Kossan Rubber Industries Bhd (KL:KOSSAN) for the gloves sector.
Kenanga, however, said technology stocks may still face near-term risks from policy uncertainty, which could result in order or capital expenditure delays. Given the fluid trade backdrop, it prefers exposure to broader domestic sectors such as banks.
On this, Kenanga said electronics manufacturing services (EMS) players face margin pressure from potential cost-sharing, while automated test equipment (ATE) firms risk project delays. The impact on outsourced semiconductor assembly and test (OSAT) is limited for now, though prolonged uncertainty may disrupt qualification timing and customer allocation.