Tariff, tech and threats from the US are intimidating - but Malaysia must stand firm

Yet a closer look at the trade data, and at the geopolitical context in which these punitive measures are unfolding, reveals a more complex picture — one in which Malaysia cannot afford to retreat in the face of pressure, and certainly must not abandon its broader economic partnerships, including with the Global South and BRICS.

Start with the numbers. According to official trade data, 64 percent of Malaysia’s two-way trade with the United States comprises semiconductors and integrated circuit (IC) boards. These are the lifeblood of global tech supply chains — and tellingly, they are exempt from the 25 percent tariffs that President Trump announced. The exemption alone signals a clear recognition by the U.S. that Malaysia’s role in the semiconductor value chain is too vital to be disrupted casually.

Moreover, when services and digital trade are included — from cloud services to telecommunications infrastructure, software engineering, and back-end support — the U.S. enjoys a trade surplus with Malaysia. Estimates place this surplus at no less than USD 1.44 billion, underscoring that the bilateral relationship is not only reciprocal, but tilted in America’s favour in several domains.

Thus, the narrative that Malaysia is "benefiting too much" from the U.S. is not only inaccurate — it is disingenuous. The tariffs, while symbolically heavy-handed, are also economically selective.

Now contrast this with Malaysia’s expanding commercial ties with the BRICS bloc — particularly Brazil, Russia, India, China, and South Africa — and more recently, with newly interested partners such as Egypt, Iran, and Saudi Arabia.

Malaysia’s trade with Brazil alone grew more than 12 percent last year — a figure that is projected to climb, especially in sectors like halal food exports, renewable energy, agriculture, and petrochemicals. Across BRICS, Malaysia is plugged into an ecosystem that is growing at a compound annual rate of more than 14 percent. Ignoring such growth because of American discomfort would be an act of economic self-harm.

What’s more, the 2025 BRICS Summit in Brazil was not the anti-American spectacle some in Washington feared. No major speeches or declarations singled out the U.S. for criticism. Instead, the summit’s communiqués emphasized infrastructure financing, climate cooperation, local currency settlements, and a multipolar, rules-based trade system — hardly the language of ideological confrontation.

This reveals a crucial truth: BRICS is not an anti-Western bloc. It is, at its core, driven by commercial realism, developmental urgency, and the desire to correct a system that still disproportionately favours the West.

Another contentious issue has been Malaysia’s support for trading in local currencies, sometimes interpreted as a campaign for de-dollarization. But this framing is misleading.

Malaysia’s position is not anti-dollar — it is pro-choice in currency usage. In bilateral trade with specific partners, it makes commercial sense to settle transactions in local currencies, or even via barter arrangements for commodities like palm oil, LNG, and rare earths. This approach reduces currency exchange risk, improves financial predictability, and opens the door to more inclusive trade with emerging economies that may not have deep dollar reserves.

Malaysia understands the global financial architecture well. It is under no illusion about the centrality of the U.S. dollar, which accounts for nearly 40 percent of global trade settlements. Likewise, the Euro commands roughly 20 percent, while China’s Renminbi remains at a modest 5 percent of global trade — even with massive promotion under the Belt and Road Initiative.

Kuala Lumpur is simply pursuing what any prudent, sovereign economy would do: diversifying its exposure while recognizing existing realities. This is not a radical policy — it’s a rational one.

Beyond BRICS lies the larger canvas of the Global South — a vast constellation of emerging markets that are driving the future of global demand, innovation, and supply chain diversification. From Africa’s mobile money revolution to Latin America’s agricultural innovation, to South Asia’s burgeoning middle class, the Global South is the world’s highest growth area, bar none.

Even the U.S. itself is quietly seeking new footholds in these regions — investing in digital infrastructure, renewable energy, and public health programs — despite its loud rebukes of rivals like China for doing the same.

This contradiction in U.S. policy — preaching decoupling, while seeking to benefit from the very regions it warns others against engaging — is neither lost on Malaysia nor on other ASEAN countries. In fact, it strengthens the case for pursuing a strategically autonomous foreign economic policy, one that does not choose sides, but instead maximizes options.

Malaysia is not naïve about American power. It respects the historical and strategic weight of the United States and values bilateral trade and security relations. But standing firm in the face of threats does not equate to antagonism — it simply reflects sovereign maturity.

Put differently, Malaysia does not seek to pivot away from the U.S., but neither will it be swivelled completely into Trump’s orbit by pressure tactics. It will work with the U.S. on semiconductors, defence, and education — just as it will work with BRICS on infrastructure, energy, and food security.

In the end, Malaysia’s approach is best described not as hedging, but as balancing — with purpose, with data, and with diplomacy. It is this equilibrium that will anchor Malaysia’s economic future in a world where power is fragmented, growth is diversified, and alliances must be fluid.

Malaysia must not blink in the face of threats. It must move forward — thoughtfully, strategically, and above all, on its own terms.

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Phar Kim Beng is Director of the Institute of Internationalization and ASEAN Studies (IINTAS), Professor of ASEAN Studies in International Islamic University of Malaysia (IIUM) and a former Head Teaching Fellow at Harvard University.