Be Proactive, Offer Trade Deals to Trump Now

A Proactive Approach to Engaging Trump 2.0

As the second Trump administration takes shape, Malaysia and the rest of Southeast Asia are yet to be directly affected by its policies. However, with the looming “reciprocal tariffs” set to be announced on April 2, the region’s members, particularly those with significant exposure to the US market, such as Vietnam, Thailand, Malaysia, and Cambodia, are likely to feel the impact. Singapore, on the other hand, has an existing free trade agreement (FTA) with the US.

Rather than adopting a wait-and-see approach, Malaysia and Asean should proactively put forward potential “deals” for the consideration of President Donald Trump, who sees himself as the ultimate dealmaker. In doing so, we can demonstrate our willingness to engage with the new administration and potentially mitigate the negative effects of the “reciprocal tariffs”.

A Summit in Kuala Lumpur?

Prime Minister Anwar Ibrahim has already invited Russian President Vladimir Putin to join the upcoming Asean summit in Kuala Lumpur. Why not extend the invitation to Trump as well? Trump is no stranger to hosting high-profile summits in Southeast Asia, having met with North Korean President Kim Jong-Un in Singapore in 2018 and Hanoi in 2019. While there is a possibility that Trump may want to meet Putin earlier in the year to witness a peace deal between Russia and Ukraine, there is no harm in quietly putting this offer on the table to gain some positive attention in the corridors of the White House.

Asean’s Value Proposition

At the same time, it would be beneficial for Malaysia to signal our intention to invest in and buy more from the US. Vietnam, the country with the third-largest trade surplus with the US, has already sent its trade minister, Nguyễn Hồng Diên, to meet with US trade representative Jamieson L Greer earlier this month. A number of agreements were signed during this visit, including commitments to buy more liquefied natural gas from the US.

Malaysia can highlight our existing investments in the US through government-linked investment companies (GLICs) such as Khazanah Nasional Bhd and EPF, including in the property and technology sectors, and announce new investment plans. Petronas and other Malaysian oil and gas (O&G) players, including Yinson Holdings Bhd and Dialog Group Bhd, may also consider a coordinated approach to investing in the fragmented fracking and O&G logistics sector in the US.

A Business Delegation to Washington DC

A business delegation to Washington DC, led by investment, trade, and industry minister Tengku Zafrul Aziz, together with heavy-hitters from our GLICs and GLCs, would be a strong signal that Malaysia is ready to do business with the US government and companies. This would also be a good opportunity to gather other Malaysian companies with investments in and exposure to the US, both small and large, including electrical and electronics players from Penang such as Greatech Technology Bhd and ViTrox Technologies Sdn Bhd, and fast-moving consumer goods companies such as Mamee-Double Decker Sdn Bhd.

MAG’s Boeing Deal

The recent announcement that Malaysia Aviation Group (MAG) is buying 30 new Boeing planes by 2030 should also form part of the narrative that Malaysia is doing business with the US in a way that benefits US companies, with positive spillover effects on the local industry.

Asean’s Hedging Strategies

Each Asean country is adopting its own hedging strategies vis-à-vis Trump 2.0, and rightfully so, given each country’s unique trading, investment, and political relationship with the US. However, there are certain value-propositions Asean can put on the table that Malaysia can facilitate as this year’s Asean chair.

For example, Asean can propose starting to negotiate an Asean-US FTA to address the areas of “unfairness” perceived by the Trump administration, which is the underlying basis of the “reciprocal” tariff approach currently being adopted. This may be a good way for us to put Asean in Trump’s good books, at least for now.

Asean can also sign agreements for partnerships in areas such as the supply of critical minerals and development of small nuclear reactors for industrial use, just to name a few. Some countries already have existing agreements with the US, but these can be enhanced and packaged to be put forth as an Asean value proposition for the US.

Conclusion

In conclusion, Malaysia and Asean should adopt a proactive approach to engaging with Trump 2.0, rather than waiting for the administration to make its next move. By offering trade deals and highlighting our existing investments and commitments, we can demonstrate our willingness to work with the US and potentially mitigate the negative effects of the “reciprocal tariffs”.

FAQs

* What is the “reciprocal tariff” approach?
The “reciprocal tariff” approach is a policy implemented by the Trump administration, which involves imposing tariffs on countries that the US deems to have unfair trade practices.
* What is the purpose of the Asean-US FTA?
The Asean-US FTA is a proposed free trade agreement between Asean and the US, which aims to address the issues of “unfairness” perceived by the Trump administration and promote greater trade and investment between the two regions.
* What are some potential areas for cooperation between Asean and the US?
Some potential areas for cooperation include the supply of critical minerals, development of small nuclear reactors for industrial use, and partnerships in the energy sector, among others.