(Feb 19): Prime Minister Datuk Seri Anwar Ibrahim has been advised by government officials to soften his rhetoric related to the Israel-Hamas war to avoid any scrutiny or retaliation from US President Donald Trump, according to people familiar with the matter.

The concerns come as Malaysian officials become increasingly worried that Trump could hit the country’s export-driven economy with US tariffs, according to the people, who asked not to be identified due to the sensitivity of the situation. In particular, they fear the US could take further action against the Southeast Asian nation’s burgeoning semiconductor industry and a raft of AI-powered data centre investments, the people said.

In a fresh announcement on Tuesday, Trump said he would likely impose tariffs on automobile, semiconductor and pharmaceutical imports of around 25%. Malaysia is among the most exposed countries to any tariffs on chips, with exports to the US accounting for 1.4% of the nation’s gross domestic product, according to Bloomberg Economics.

Trump has threatened tariffs on a range of nations for failing to get in line with American policy priorities, with a focus on countries that have large trade surpluses with the US.

Anwar’s relations with Washington have been rocky in recent years due to his fierce criticism of Israel’s assault on Gaza and outspoken support of Hamas, which has been designated as a terrorist organisation by the US and European Union. 

Anwar appears to have become more cautious of late following nearly two years of fiery rhetoric in support of Hamas, both in Parliament and at pro-Palestinian rallies at home. After Trump said this month the US should take over the devastated Gaza Strip, a proposal that drew worldwide condemnation, Anwar said only that Malaysia would study the proposal. He has focused his comments more on creating a fund with Japan to help rebuild Gaza. 

In a Facebook post last week, Anwar accused “the Israeli regime” of undermining the ceasefire brokered by Qatar, Egypt and the US, in a move that appeared to take shots at Israel while avoiding any criticism of the Trump administration.  

Anwar’s office didn’t respond to an emailed request for comment. 

The Biden administration repeatedly expressed dissatisfaction with Anwar’s government over his views on the Middle East. A former Malaysian envoy to the US during Biden’s presidency recently said publicly he was summoned by the State Department five times to explain matters including an Anwar meeting with a Hamas delegation, his visit to Russia last September, and open support for Iran’s right to respond to Israel’s attacks.

The calls for Anwar to tone down his commentary on the Middle East are part of Malaysia’s broader strategy to balance ties between the US, which is the country’s third-largest trading partner, and emerging economies in the Global South led by China. The people said Anwar’s government is coming up with a geopolitical risk framework to ramp up trade ties with Russia and Brazil, two key members of the BRICS grouping of major emerging market economies that Malaysia joined last year. 

At the same time, Malaysia is looking to court more US-based companies such as Microsoft Corp, Nvidia Corp and Amazon.com Inc, which are all building AI-powered data centres in Malaysia. The US is the nation’s third-largest market for semiconductor exports, and foreign tech firms have stepped up their presence in Malaysia to lessen their dependence on Taiwan and China. 

One threat to that now is a rule restricting US exports of chips used in artificial intelligence, which was issued by the Biden administration shortly before Trump took over. Trump can still reverse the chip export rule during a 120-day comment period that ends in April.

“Malaysia will see some challenges in the development of data centres, but it will not affect the development of an ecosystem for data centres,” Deputy Minister of International Trade and Industry Liew Chin Tong told Parliament on Tuesday. 

Still, Malaysia hasn’t done much to engage Trump during the presidential campaign, and is unlikely to make significant inroads now that he has returned to the White House, the people said. 

Anwar has entrusted Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz to bolster relations with the Trump administration, the people said. Zafrul told reporters this week that he plans to head to the US in the second quarter to engage with investors and discuss trade. 

Malaysia’s International Trade and Industry Ministry declined to comment, while the Economy Ministry did not respond to a request for comment. 

Malaysia’s trade surplus with the US makes it a prime target for the Trump administration. US shipments to Malaysia stood at US$27.7 billion (RM123.1 billion) last year, an increase of close to 44% from 2023, while American imports from the nation totalled US$52.5 billion in 2024, up 13.7% during the same period, according to data from the US Trade Representative. 

Around two million Palestinians still reside in Gaza under dire humanitarian conditions. In January, the United Nations said almost 70% of structures in the strip had been destroyed or damaged. While Trump has called on neighbouring Jordan and Egypt to absorb masses of Palestinian refugees, both countries have so far rejected that suggestion, even as Trump had threatened to withhold aid.

Uploaded by Tham Yek Lee