Tariffs, Trump And Trade: Why Malaysia Must Choose Restraint Over Retaliation

By Phar Kim Beng

KUALA LUMPUR, April 9 (Bernama) -- The recent decision by the United States (US) to impose tariffs on Malaysian exports marks a sharp turn in global economic diplomacy, one that is symptomatic of deeper geopolitical anxieties. 

With President Donald Trump now back in the White House, the world is once again adjusting to his brand of muscular nationalism -- one that conflates trade with leverage and diplomacy with domination.

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While these tariffs may be presented in economic terms, they must be interpreted through a geopolitical lens.

Trade wars, like their military counterparts, are rarely about what they claim to be. They are instruments of influence, deployed not merely to protect domestic industries but to shape global behaviour.

Great powers operate on a different plane. They possess not only the capacity to launch wars, military or economic, but also the endurance to absorb their costs. 

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However, the burdens are rarely shared equally. Often, the common people, both at home and abroad, pay the price. In Trump’s America, tariffs are not just policy -- they are theatre (drama). 

They are a declaration that America will no longer tolerate economic dependency, even if it means short-term pain for its own consumers.

Trump’s return has revived the “Make America Great Again” doctrine, which seeks to reshape global supply chains and dismantle what he views as unfair trade practices.

Tariff pressure is real

In this worldview, even friendly nations like Malaysia are not exempt from pressure.

The logic is brutally transactional: If you sell too much to America, you will be punished, regardless of longstanding ties or mutual benefits.

For Malaysia, a trading nation by nature and necessity, the implications are serious. Historically, we have been caught in the undertow (undercurrent) of global economic tsunamis.

During the Great Depression of the 1930s, the US enacted the Smoot-Hawley Tariff Act, triggering global retaliation.

Malaya, then a major rubber and tin exporter, suffered deeply from the resulting collapse in demand. Now, almost a century later, Malaysia faces a similar crossfire.

Yet this is not 1930. The global economy is more interdependent, and Malaysia’s role is more sophisticated.

Today, we export not just raw commodities but high-value components that power global technology.

In fact, 67 per cent of Malaysia’s semiconductor-related exports to the US have been exempted from the newly announced 24 per cent tariffs. Only 1 per cent of our palm oil exports will be affected.

In contrast, neighbouring countries such as Vietnam, Cambodia, and Laos face a blanket 46 per cent tariff on key sectors.

The message is clear: Malaysia is being nudged, not punished. But the pressure is real.

A call for restraint, not retaliation

As ASEAN chair in 2025, Malaysia is uniquely positioned to shape the regional response, not through confrontation but through composure. This is a moment that calls for restraint, not retaliation.

The temptation to respond in kind must be resisted. Tariff wars rarely produce winners, and middle powers like Malaysia have far more to lose than gain in a tit-for-tat exchange.

A measured response is not weakness; it is strategic maturity.

We must also challenge the simplistic narrative of Malaysia’s trade “surplus” with the US, often cited at US$24 billion (US$24=RM4.48).

That figure omits critical flows in services and digital trade, where the US enjoys a considerable edge.

American companies such as Netflix, Amazon, Meta (Facebook), and other online platforms dominate Malaysian digital consumption.

These are unaccounted-for exports that benefit the US economically, even if they do not appear in traditional trade data.

This more nuanced understanding should guide Malaysia’s diplomatic approach. 

Rather than pursuing legal remedies at the World Trade Organisation -- which may take years and yield uncertain outcomes -- Malaysia should engage the US through quiet, persistent dialogue. 

Bilateral channels, backed by data and pragmatism, offer the best route to de-escalation.

Domestically, there will be pain in targeted sectors like furniture, textiles, and certain commodities not covered by exemptions. These industries employ large numbers of Malaysians and may become politically sensitive. 

However, there are also potential openings. Sectors like solar energy, which is encouraged by the Trump administration’s industrial policy, could expand operations in the US, thus bypassing the tariffs and benefiting from new incentives.

Malaysia’s best path forward

In short, Malaysia must not treat these tariffs as a personal affront or a geopolitical ultimatum. 

They are part of a broader strategy -- one that reflects the enduring US desire for economic preponderance and strategic leverage.

Trump’s America is transactional, but it is not entirely unpredictable. It rewards submission, yes, but it also recognises leverage when presented calmly and coherently.

Malaysia’s best path forward is to remain steady, principled, and alert.

As the ASEAN chair, it must also avoid the temptation to turn this into a bloc issue.

ASEAN unity is fragile, and turning economic friction into a regional flashpoint will only serve the interests of external powers.

In a world shaped by fragmented hegemony and revived nationalism, middle powers like Malaysia must navigate with agility.

This means choosing diplomacy over drama, calm over confrontation.

Let the great powers flex. Let them posture.

Malaysia, for its part, must lead with quiet strength and strategic wisdom.

-- BERNAMA

Phar Kim Beng, PhD, is professor of ASEAN Studies at the International Islamic University of Malaysia.