Malaysia cautioned that removing U.S. tariff exemptions on its semiconductor exports could undermine competitiveness and disrupt vital supply chains, according to its latest economic outlook report.
The warning comes after President Donald Trump imposed a 19% tariff on Malaysian exports in August, while temporarily exempting semiconductors pending a national security review. Trump also floated a 100% import tariff on foreign-made chips, exempting firms with U.S. manufacturing bases.
Malaysia, the sixth-largest semiconductor exporter, said losing exemptions could “reduce competitiveness and strain sectors integrated with the U.S. supply chain.” The report projected GDP growth could fall 0.76 percentage points, with trade expected to shrink next year.
Kuala Lumpur revised its 2025 growth forecast to 4%–4.8% and expects 4%–4.5% growth in 2026, citing trade uncertainties. Analysts warn that tariffs could hit American companies like Intel and Texas Instruments, which rely on Malaysia’s chip assembly and testing.
