KUALA LUMPUR (Aug 6): Phillip Capital estimates the total value of exports subject to the 10% tariff imposed by the US to be RM63.3 billion, equivalent to 4.2% of Malaysia’s total exports.

"On the national level, the total exports value subject to the 10% tariff is around RM63.3billion or 4.2% of the Malaysia’s total exports. Strong global demand for semiconductor, which is exempted from the tariff, will continue to play a key role in boosting Malaysia’s exports activities," the research house said in a note on Thursday.

Under the new tariff policy, countries will be subject to either a 10% or 12.5% tariff rate, depending on the strength of their labour safeguard policies and the extent to which they prohibit the importation of goods produced using forced labour.

Phillip Capital expects the impact of the new tariffs on Malaysia’s external demand to remain relatively limited due to key drivers of the country's export performance, namely within the semiconductor and electrical and electronics (E&E) sector, being included in the Office of the United States Trade Representative’s universal exemption list.

The house found that 68.0% of Malaysia’s exports to the US will be exempted from the tariff. 

By product category, semiconductors recorded the highest exemption rate at 99.9%, while the exemption rates for E&E products stood at 67.1% and non-E&E exports at 45.4%.

The US remains an important export destination for Malaysia’s E&E sector, Philip Capital explained. 

Between 2023 and 2025, Malaysia’s exports to the US accounted for about 13.1% of Malaysia’s total exports, while E&E products alone accounted for 34.0% of Malaysia’s exports to the US, significantly higher than their 14.3% share of Malaysia’s global exports.

Meanwhile, the house suggests a neutral tariff impact on rubber glove exports, despite their status as non-exempt goods under the latest US tariff framework, attributed to existing tariffs and significantly higher tariffs imposed on Chinese medical gloves.

“Nevertheless, the impact on Malaysian glove makers remains neutral, as the 10% tariff effectively replaces the existing tariff rate, resulting in no incremental tariff burden,” it said in the note.

Overall, Malaysia will continue to have a robust export pipeline to the US, thanks to undisrupted global semiconductor supply chains.

This comes after the Malaysia-US Agreement on Reciprocal Trade, which intended to ease US reciprocal tariffs down to 19% for Malaysian goods, was rendered null and void by the US Supreme Court at the beginning of this year.