How Malaysia can strengthen multilateralism under Trump 2.0
Trade winds and tariff storms
When Donald Trump first entered the White House in 2017, his "America First" doctrine rattled global markets and disrupted longstanding trade relationships. Now, with his return to the Oval Office, the world is bracing for a second round of economic nationalism. For Malaysia, a mid-size economy deeply integrated into global supply chains, Trump’s presidency presents both risks and unexpected opportunities.
China is now Malaysia’s biggest trading partner. As a key supplier of semiconductors, electrical components, and palm oil, Malaysia has long benefited from its ability to navigate between China and the US. However, if Trump escalates his economic warfare with Beijing, Malaysian exports — deeply intertwined with Chinese supply chains — could suffer collateral damage. On the other hand, US efforts to shift production away from China could accelerate investment flows into Malaysia. The country has already benefited from multinational firms relocating manufacturing operations to Asean markets, particularly in electronics and technology.
The ringgit and the dollar’s grip
Trump’s return is likely to spark renewed volatility in global currency markets. His previous presidency saw an erratic trade policy and fiscal expansion that strengthened the US dollar, putting pressure on emerging market currencies, including the Malaysian ringgit. In 2018, the ringgit weakened by over 5% against the dollar amid Trump’s tariff wars, a scenario that could repeat itself if protectionist policies return. If a similar scenario unfolds, Bank Negara Malaysia may be forced to intervene more aggressively to stabilize the currency and manage inflationary pressures.
Geopolitical balancing act
Beyond economics, Trump’s erratic foreign policy could alter Malaysia’s geopolitical calculus. During his first term, Trump largely ignored Southeast Asia, preferring bilateral dealings over multilateral diplomacy. His transactional approach to foreign policy — where alliances are measured in dollars and cents rather than diplomatic goodwill — may put pressure on Malaysia to explicitly align with US interests in the Indo-Pacific, particularly concerning China and the South China Sea. Yet, Malaysia has historically maintained a non-aligned stance, balancing great power rivalries with strategic pragmatism.
Opportunity in uncertainty
As the world re-enters the unpredictability of a Trump presidency, Malaysia must prepare for heightened economic and geopolitical turbulence. Yet, uncertainty breeds opportunity. With proactive economic policies, trade diversification, and a calibrated foreign policy, Malaysia could emerge as a net beneficiary of the shifting global order. The challenge is not just to weather the storm, but to harness its winds for strategic advantage.
Conclusion
Strengthening multilateral cooperation through BRICS, Asean, and other platforms will be crucial in ensuring Malaysia remains an influential player in the global economy, rather than a passive observer of geopolitical shifts. If played correctly, Malaysia’s ability to navigate these complex relationships could serve as a model for other mid-size economies looking to balance between competing global powers.
FAQs
Q: What are the potential implications of Trump’s return for Malaysia’s economy?
A: Trump’s presidency could lead to increased economic nationalism, potentially disrupting global supply chains and affecting Malaysian exports.
Q: How can Malaysia navigate the challenges posed by Trump’s foreign policy?
A: By strengthening ties with other nations, particularly within Asean and BRICS, Malaysia can reduce its reliance on any single superpower and promote a more balanced global order.
Q: What are the potential benefits of diversifying Malaysia’s trade partners?
A: Diversification could lead to new investment opportunities, increased competitiveness, and reduced exposure to potential US economic leverage.
Q: How can Malaysia balance its relationships with the US and China?
A: By maintaining a non-aligned stance, balancing great power rivalries with strategic pragmatism, and engaging with other multilateral platforms, Malaysia can reduce its reliance on any single power and promote a more balanced global order.