US-China renewed dialogue seen lifting Malaysia's trade outlook

Renewed trade talks between the United States and China are expected to boost investor confidence and strengthen Malaysia's trade momentum, an economist said.

Putra Business School economist Professor Dr Ahmed Razman Abdul Latiff said any move to reduce tariffs between the two economic giants could steady the sails for Malaysia by boosting confidence and trade visibility.

"If the US and China agree to resume talks and reach a deal to reduce tariffs on each other, Malaysia's trade environment and investor sentiment will become less volatile and uncertain," he told Business Times.

"This would boost investor confidence and encourage continued investment in Malaysia," Razman added, noting that while tensions persist, Malaysia is taking steps to shield its economy.

Razman also expects Malaysia's export markets and supply chains to remain competitive, although growth may moderate slightly.

This, he said, is supported by ongoing efforts to diversify export destinations, grow the country's trading partnerships and enhance intra-Asean trade.
 
Should US-China negotiations break down again, he said the impact on Malaysia would likely remain limited.

"There will be some negative impact but it will be minimum as majority of Malaysia's products such as semiconductor will not be subjected to higher tariffs by the US," he said.

Trump and Xi held a 90-minute phone conversation on Thursday, marking their first direct dialogue since Trump resumed office.

The call, widely viewed as a positive step towards easing the prolonged trade tensions between the world's two largest economies, laid the groundwork for renewed bilateral cooperation and the resumption of high-level trade negotiations.

Both leaders agreed to restart trade talks, with senior US officials, including Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, expected to meet their Chinese counterparts.

The timing and venue for these negotiations have yet to be finalised but are anticipated to be announced in the coming weeks.

Although the call sparked market optimism, US stocks closed lower as a sharp decline in Tesla shares outweighed the positive momentum from progress in US-China tariff negotiations.

Tesla shares plunged over 14 per cent in heavy trading as the escalating public feud between Trump and businessman Elon Musk rattled investors, wiping out about US$150 billion in market value.

Razman downplayed concerns over the spat saying, "The impact on Malaysia will be minimal, as the fallout primarily affects the SpaceX program and Tesla production."

Source: Business Times