Economist: Malaysia Should Stay Engaged As US Section 301 Probe Continues
March 13, 2026
Malaysia should continue its diplomatic engagement with the United States while maintaining transparency in its manufacturing and supply chains and further diversifying trade, an economist advised.
The remarks follow the US decision to launch Section 301 investigations into structural excess manufacturing capacity in several economies, including Malaysia.
IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan.
Mohd Sedek Jantan, director of investment strategy and country economist at IPPFA Sdn Bhd, explained that Section 301 probes are a procedural step the US typically takes before imposing trade measures.
“These investigations do not automatically lead to tariffs,” he said. “They allow Washington to assess whether certain manufacturing policies or production levels create burdens on US commerce, particularly after the Supreme Court invalidated earlier emergency tariffs.”
Mohd Sedek noted that Malaysia’s exposure to the probe is moderate, as it focuses on manufacturing sectors that form key components of Malaysia’s exports to the US, such as electronics, semiconductors, and machinery. He added that the main risk lies in closer scrutiny of supply chains rather than broad tariffs.
“The investigation could accelerate supply chain restructuring across Asia and ASEAN,” he said. “Companies may rethink where they locate production, leading to greater diversification within the region rather than concentrating output in a few countries.”
He also highlighted that this development presents both risks and opportunities for Malaysia. While sectors like electronics and electrical products, semiconductors, machinery, and intermediate manufacturing could face increased scrutiny, the country could also benefit as multinational companies consider Malaysia a stable and neutral hub for regional production.
“If trade measures are imposed, impacts are likely to be sector-specific, mainly affecting supply chains linked to these industrial segments rather than Malaysia’s exports broadly,” Mohd Sedek said.
He emphasized that ASEAN cooperation will be critical, as many supply chains operate across multiple countries in the region. “Better coordination on rules of origin and supply chain transparency can help address US concerns while keeping ASEAN an attractive and trusted manufacturing base,” he added.
