KUALA LUMPUR: The Supreme Court’s pending ruling on tariff measures imposed under the International Emergency Economic Powers Act (IEEPA) by the US administration is expected to have varying implications for the glove sector this year.
Hong Leong Investment Bank Bhd (HLIB) said the court is required to decide on the legality of the IEEPA-based tariffs by the end of its current term in June 2026, and outlined two possible scenarios.
If the Supreme Court does not rule against the use of IEEPA to impose tariffs, HLIB said the sector’s demand-supply dynamics would remain broadly in line with its 2026 outlook.
However, if the court deems the IEEPA-based tariffs unlawful, the reciprocal and fentanyl-related tariffs would have to be repealed.
In that case, total tariffs on medical and surgical rubber gloves from China would fall to about 100 per cent from 120 per cent, leaving Chinese producers still uncompetitive for US distributors compared with their Asean peers, it said.
For Asean manufacturers, the ruling would reduce US tariffs on medical and surgical rubber gloves to zero from 19 per cent to 20 per cent previously for Malaysia, Thailand, Indonesia and Vietnam.
“Despite the reduction, we believe no single Asean country gains a clear advantage within the region, although they remain more competitive than Chinese peers,” HLIB added.
While a ruling against the tariffs could trigger a short-term demand spike through front-loading, the firm does not expect this to revive longer-term investor positioning in the glove sector.
“Structural supply pressures remain the primary concern over the mid to long term,” HLIB said, maintaining a “Neutral” stance on the sector.
© New Straits Times Press (M) Bhd
