KUALA LUMPUR: Hong Leong Investment Bank Bhd (HLIB) said Malaysia’s export momentum in August highlighted the impact of higher US tariffs and waning front-loading demand, although diversification in export destinations provided some buffer.
It noted that shipments to China and the European Union (EU) continued to strengthen, offsetting part of the weakness in the US market.
“The scheduled US Supreme Court hearing on Nov 5 on the legality of Trump‘s tariffs could provide greater clarity to global trade uncertainty.
“Nevertheless, downside risks to the trade outlook remain, particularly stemming from ongoing trade negotiations with the US and potential semiconductor tariffs, as well as softer growth prospects among key trading partners,” HLIB said.
In view of these factors, HLIB maintained its 2025 gross domestic product forecast at 4.0 per cent.
Maybank Investment Bank Bhd (Maybank IB) said the key development in August was the fall in exports to the US, the first decline since December 2023.
This followed the finalisation of the 19 per cent reciprocal tariff at the end of July, which took effect on Aug 7.
“We expect the choppy monthly external trade numbers to persist as US tariff uncertainties linger amid risks of more product-specific tariffs such as semiconductors, a key Malaysian export to the US, and pharmaceuticals, which are currently exempted,” it said.
Maybank IB added that the US Commerce Department’s investigation under Section 232 of the US Trade Act on semiconductor imports, launched in April 2025, is still ongoing.
It said the findings and recommendations will be submitted to President Trump, who is also scheduled to attend the 47th Asean Summit in Kuala Lumpur from Oct 26-28.
“Hope floats for clarity and positive news on semiconductor tariffs during his visit,” it said.
Malaysia’s export growth moderated to 1.9 per cent in August compared with 6.5 per cent in July, missing consensus expectations of 3.0 per cent.
Imports slipped into contraction at -5.9 per cent, leading to a wider trade surplus of RM16.1 billion.
Exports to the US plunged 16.7 per cent following the imposition of 19 per cent tariffs on Aug 8.
© New Straits Times Press (M) Bhd
