KUALA LUMPUR: The temporary suspension of tariffs by the Trump administration may provide a modest but meaningful boost to Malaysia’s gross domestic product (GDP), potentially lifting growth by between 0.2 and 0.8 percentage point (pp), according to CIMB Securities.
The economic impact will depend on the duration of the pause and the outcome of the upcoming US-Malaysia trade talks scheduled for late April.
Under a base case scenario where the United States maintains a reduced 10 per cent tariff for a 90-day period—from April 9 to July 8—before reinstating the original 24 per cent rate, Malaysia’s GDP could see an uplift of around 0.2 pp.
“If the 10 per cent tariff is extended through the end of 2025, the upside could increase to 0.6 pp. In the most optimistic scenario—where tariffs are fully removed after July—the GDP growth boost could reach 0.8 pp, potentially lifting full-year growth to 4.8 per cent,” the firm noted.
However, CIMB Securities added that this still falls short of its earlier forecast of 5.0 per cent for 2025, citing persistent trade uncertainties amid renewed global tensions.
The bilateral US-Malaysia negotiations later this month are expected to play a critical role in shaping the economic outlook. The talks may address ongoing disputes regarding Malaysia’s existing tariffs on selected US imports, including agricultural products, alcohol, and motor vehicles.
Broader issues such as Malaysia’s approved permit system, halal import regulations, and foreign ownership restrictions may also be discussed. In turn, Malaysia may consider increasing imports of US goods—particularly defence systems, aircraft, and capital equipment—as part of a broader effort to narrow the trade imbalance.
CIMB Securities stated that if the talks yield positive outcomes, they could enhance strategic bilateral ties and support trade growth in the second half of the year.
“Despite the potential upside, we are maintaining our 2025 GDP forecast at 4.0 per cent for now, given the unpredictable nature of the Trump administration’s trade policies and uncertainties surrounding the negotiations. A breakdown in talks could reignite trade tensions, dampen investor sentiment, and curb global trade flows,” the firm warned.–BUSINESS TIMES
