KUALA LUMPUR: The suspension of tariffs by Donald Trump's administration could boost Malaysia's gross domestic product (GDP) by between 0.2 and 0.8 percentage point (pp).
CIMB Securities said this depends on how long the pause lasts and the results of the upcoming US-Malaysia trade discussions scheduled for late April.
"Under a scenario where the US imposes a 10 per cent tariff for a 90-day period (April 9 until July 8) before reverting to the original 24 per cent rate, Malaysia could experience a modest growth uplift of about 0.2 pp.
"If the 10 per cent tariff is extended through the remainder of 2025, the upside could increase to 0.6 pp. In a more optimistic case where tariffs are fully removed after July, the growth boost could reach 0.8 pp, potentially lifting full-year GDP growth to 4.8 per cent," the firm said.
However, CIMB sSecurities aid this remains below its initial 2025 forecast of 5.0 per cent, reflecting the drag from heightened trade uncertainty amid renewed global trade tensions.
"Bilateral US-Malaysia trade talks slated for end-April could further shape the economic outlook and may cover the dispute regarding Malaysia's existing tariffs on selected US imports.
"This includes agriculture products, alcohol, and motor vehicles and other trade barriers such as the approved permit system, halal food import requirements, and foreign ownership limitations. In addition, discussions may also explore increasing imports of US goods such as defense, aircraft, and capital equipment to narrow the trade balance between the two countries," it added.
According to CIMB Securities, if these agreements come to fruition, they could strengthen strategic economic relations and help drive trade expansion in the second half of 2025.
"Despite the upside, we maintain our GDP growth forecast of 4.0 per cent at this juncture as the Trump administration's trade policy remains volatile, and there is considerable uncertainty surrounding the outcome of the planned US-Malaysia negotiations.
"A breakdown in talks could re-escalate trade tensions, dampen investor sentiment, and reduce trade flows globally," it added.
