PETALING JAYA: Malaysian exporters are bracing for a 24% tariff on goods bound for the United States, set to start by July.
Industry groups warned that the impact would be punishing, especially for SMEs.
They are urging the government to move beyond quick fixes and focus on long-term structural reforms to strengthen the country’s export resilience.
Small and Medium Enterprises Association president Datuk William Ng cautioned that the impending tariff could have far-reaching implications for SMEs operating in
high-volume, low-margin sectors.
He said businesses in industries such as furniture, rubber gloves, and electrical and electronics are especially vulnerable to
the impact.
“Malaysia is among the top 10 furniture exporters to the United States, with nearly RM6 billion worth of exports last year.
“A 24% cost hike to US buyers could render Malaysian-made furniture significantly less competitive, forcing many SMEs to either absorb the cost or risk losing market share.”
However, the Investment, Trade and Industry Ministry remains optimistic, particularly regarding Malaysia’s standing in the rubber glove industry.
Its minister Datuk Seri Tengku Zafrul Abdul Aziz, in a briefing on its Q1 performance on Tuesday, said Malaysia is poised to expand its dominance in this sector.
“We hold around 47% of the US rubber glove market and, based on industry feedback, that figure is expected to rise to 55%.”
In contrast, Federation of Malaysian Manufacturers president Tan Sri Soh Thian Lai pointed to data from an April survey that paints a worrying picture.
According to the findings, 24.1% of companies expected their export volumes to shrink between 10% and 30% while 27.8% foresaw a drop exceeding 30%. On the profitability front, 40.7% anticipated margin erosion of more than 30%.
“The figures reflect the potential severity of revenue loss if the 24% tariff comes into force.
“Such declines would not only disrupt business cash flow but also jeopardise the financial viability of exporters already grappling with rising operational costs and competitive price pressures.”
Ng said the ripple effects go beyond exports and businesses are already bracing for
knock-on consequences, such as production slowdowns, reduced shifts, fewer overtime hours and scaled-back hiring.
“It is not just exports at stake; it is the multiplier effect.
“Fewer orders mean less work for logistics firms, weaker demand from local suppliers and shrinking income for employees.
“We must resist the urge to treat foreign labour as a quick fix in the face of international trade headwinds.”
Both business captains stressed the need for strategic transformation to future-proof
the industry.
Soh called for a nationwide push
towards automation, digitalisation and workforce upskilling.
“To support this shift, we urge the government to enhance incentives for automation, particularly for SMEs, through targeted grants and access to Industry
4.0 solutions.
“Upskilling programmes must also be ramped up to equip local talent for a more sophisticated manufacturing landscape.”
Ng echoed this sentiment, underscoring the importance of developing local talent and embracing productivity gains.
“For SMEs, the solution is not hiring cheaper labour; it is becoming more productive, more efficient and offering greater value.”
