Malaysia took the initiative by offering the United States a technology safeguard agreement to reassure stakeholders and ensure supply chain stability amid escalating global trade tensions.
Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz said the proposal is made to put at ease the US government and American businesses in Malaysia. "One thing you have to bear in mind is that many companies that are in Malaysia and exporting to the US are also US companies," he told CNBC in an interview.
He further added that Malaysia is closely cooperating with US firms that would be impacted if semiconductors are hit with further tariffs. Semiconductors and Electrical & Electronics (E&E) products currently make up around 30% of Malaysia's exports to the US.
When questioned on the wider implications of global tariffs on Malaysia's Industrial Master Plan, Zafrul admitted the challenges, saying that being an open economy, Malaysia is exposed to disruptions. A slowdown in global trade — including US tariffs on China — would affect US, multinational, and Malaysian companies in the supply chain.
Referring to the possible US-China technology decoupling, specifically in AI and chip manufacturing, he cautioned that it would add costs and burden global supply chains even more. He said that costs have already begun to rise, and ongoing tariffs will only escalate this, both on demand and supply.