Why Malaysia may still face trade uncertainty after US midterms

The midterm elections shifted control of both Congress and the Senate from Trump’s Republicans to the Democrats. Voters rejected the Republicans by wide margins, amid anger over surging living costs linked to the Iran war. The result matters because Congress can challenge trade policy, including tariffs affecting Malaysia.

Democrats are expected to pressure Washington to review tariffs that raise costs for US businesses. However, changing tariff policy would require legislation. Trump can veto that legislation, and Democrats do not have enough votes to override his veto. This limits the new Congress’s ability to force change.

Malaysia therefore cannot assume its trade relationship will improve. Experts expect greater scrutiny and uncertainty, not automatic tariff relief. US policy may remain focused on correcting trade imbalances and protecting American manufacturing. Malaysia’s October agreement promised major investments and purchases, but its earlier tariff terms later became uncertain after the Supreme Court ruling.

A tariff is a government charge on goods entering a country. In the United States, it is applied to imported products from another country. The article discusses Trump’s tariffs as a central part of his trade policy, including levies on Malaysian exports.

When an imported good faces a tariff, the importer generally pays the charge at the border. Businesses may then pass that added cost to customers, absorb it themselves, or seek cheaper suppliers. This can raise prices, reduce demand, or change where companies buy and manufacture products.

The article gives Malaysia’s exports as a clear example. Washington imposed a fresh 10 per cent levy on most Malaysian exports after an earlier tariff arrangement became inapplicable. Experts also said tariffs directly raised costs for US businesses. Tariffs can therefore affect both the exporting country and American companies that rely on imported goods.

Malaysia’s October trade deal with the United States was valued at US$240 billion in promised investments and purchases of American goods. The agreement was intended to secure more favourable treatment for Malaysian exports during a period of global tariff disruption.

In exchange, Malaysia accepted commitments involving investment and increased purchases from the United States. Washington agreed to a 19 per cent tariff rate under the deal. This arrangement showed how smaller countries were negotiating directly with Washington after Trump’s sweeping tariffs disrupted global trade.

The deal’s tariff benefit later became uncertain. In February, the US Supreme Court found that Trump had acted unconstitutionally by using emergency powers for his tariff policy. The earlier rate agreed under the October 2025 deal was no longer applicable. In July, the US imposed a fresh 10 per cent levy on most Malaysian exports, alleging Malaysia had not eliminated forced labour in its supply chain.

A Democratic-led Congress can pressure the president by holding debates, conducting scrutiny, and passing legislation aimed at changing trade policy. Democrats are expected to focus especially on tariffs that raise costs for US businesses. Their majority gives them influence over the national trade debate.

The key mechanism is the presidential veto. Even if both chambers pass a bill seeking to review or remove tariffs, Trump can reject it. Congress can override a veto only with a large supermajority. According to Asrul Sani, Democrats do not have enough votes to do that.

The political shift therefore does not guarantee a policy shift. Democrats may expose the costs of tariffs and increase pressure on the administration, but Trump retains the final blocking power over ordinary legislation. Malaysia should expect more scrutiny and uncertainty, while waiting for negotiations, executive decisions, or other legal developments to determine its tariff treatment.

If the United States keeps or increases tariffs, Malaysian goods entering the American market may face higher costs. That can make them less attractive compared with goods from countries facing lower charges. The uncertainty itself can also make companies hesitate before investing or expanding.

The article shows this risk through the fresh 10 per cent levy on most Malaysian exports. A tariff can raise the price paid by US importers or reduce the amount exporters receive if businesses absorb the charge. Companies may then cut orders, delay investment, or search for different suppliers. US businesses that depend on Malaysian products may also face higher costs.

Malaysia could therefore experience weaker export opportunities and more pressure to negotiate with Washington. Its earlier agreement promised US$240 billion in investments and purchases, but the agreed tariff treatment later became uncertain. Continued US scrutiny of supply chains adds another risk for Malaysian firms linked to Chinese trade.

The United States is targeting China’s vast global supply chain, not only goods shipped directly from China. Companies often operate across several countries, so trade involving Malaysia can become part of Washington’s effort to limit Chinese economic links. This makes Malaysia vulnerable to policies aimed primarily at Beijing.

The article says the Biden administration kept Trump’s earlier tariffs and sanctions on China, added levies on Chinese exports, and tightened scrutiny of trade partners such as Malaysia. Hafidzi Razali warned that US attention to China’s supply chain could prevent Anwar Ibrahim’s support for Democrats from producing a better Malaysian trade deal.

Malaysia therefore faces risks even when its own trade policy is not the main issue. US officials may examine Malaysian exports, supply chains, and labour conditions more closely. The article also warns that the extended US-China trade truce was due to expire on January 10, potentially exposing Malaysia and other countries to another round of trade upheaval.

Tariffs change international trade by adding a charge to imported goods. That charge can raise the final price, reduce demand, and alter the balance between foreign and domestic products. Trump said his tariffs would correct trade imbalances and bring manufacturing back to the United States.

The mechanism can spread through supply chains. A US company importing Malaysian components may pay more, pass the cost to customers, accept lower profits, or find another supplier. Malaysian exporters may then lose orders or lower prices to remain competitive. Companies can also reconsider where they source materials or locate production.

The article shows both the intended and unintended effects. Trump’s tariffs were designed to support US manufacturing, but they sent global trade into turmoil and triggered a damaging tariff war with China. Experts said tariffs directly raised costs for US businesses. For Malaysia, continuing or increased tariffs would mean more uncertainty and pressure on exporters.