PETALING JAYA: Malaysia could soften the blow of the recent United States (US) tariff hike by rolling out subsidies for key imports and short-term price controls to shield households from inflation, say economists.
Universiti Teknologi Mara Academy of SME and Entrepreneurship Development coordinator Dr Mohamad Idham Md Razak said cutting reliance on US demand via fast-tracked trade deals with emerging markets in Asia and Africa could help bolster export resilience.
“Currency interventions and strategic import substitution would ease pressure on the ringgit and curb dependence on dollar-priced goods.
“Targeted investment in high value-added domestic industries would help reshape the economy and build long-term self-reliance,” he told theSun.
Mohamad Idham said Bank Negara Malaysia might adopt a mix of monetary tightening and strategic forex management to weather current pressures.
He said gradual interest rate hikes could draw in portfolio inflows and help stabilise the ringgit, but warned they must be implemented cautiously to avoid stifling domestic demand.
“Intervening in currency markets using reserves to manage sharp volatility could steady the exchange rate.
“Tailored credit support for affordable housing and key consumer goods could ease household burdens without triggering broad monetary expansion, striking a balance between inflation control and inclusive growth.”
Mohamad Idham also said both businesses and consumers in Malaysia should adopt financial safeguards and agile strategies to navigate shifting trade landscapes.
He advised households to prioritise debt reduction and build emergency savings while shifting spending towards homegrown products less exposed to import-driven inflation.
“For SMEs, they could weather currency swings using hedging tools and forward contracts. Investing in automation and workforce upskilling would lift productivity and allow firms to enter resilient sectors such as renewable energy.
“Retraining programmes could help workers pivot into growth industries, minimising job losses. Trade agencies, in turn, should help firms tap into less US-dependent markets such as Asean and the Middle East.”
Global Labour Organisation Southeast Asia lead and economist Prof Dr Niaz Asadullah said the 24% US tariff could hit Malaysia’s semiconductor sector hard, making local chips pricier and less competitive than those from Vietnam, Thailand and India.
“This could undermine Malaysia’s standing in the global chip supply chain and stall momentum under the New Industrial Master Plan 2030.
“The US is Malaysia’s third-largest export market. Weaker demand from American buyers may dampen manufacturing growth.
“SMEs tied to US contracts face higher costs and job cuts, while a fall in electrical and electronic exports could further drag down the ringgit and push up import prices.”
Niaz said companies that had relocated from China to Malaysia to dodge US-China tariffs might now rethink their bets, potentially prompting global electronics firms to redirect supply chains elsewhere.
“Singapore, with its more favourable US trade terms, may snap up more electronics re-exports at Malaysia’s expense.”
On Wednesday, US President Donald Trump signed an executive order slapping reciprocal tariffs on 49 countries, including Thailand (37%), Indonesia (32%), Brunei (24%) and the Philippines (18%), effective April 9.
Trump said the new ad valorem duties on imports from US trade partners would start at 10% from Saturday, climbing soon after to country-specific rates.
