The emergence of US-minus trade landscape

Malaysian Reserve

22-07-2025

CHINA is expected to accelerate its economic and diplomatic engagement with ASEAN as part of a broader strategy to mitigate US-centric risk and build alternative trade corridors.
At the same time, an emerging trend in the region is a 'US-minus' trade landscape — one in which regional blocs such as Southeast Asia, the Gulf Cooperation Council (GCC) and the European Union (EU) are actively deepening their economic linkages in response to US protectionism and unpredictability.
These were some of the views expressed at a panel discussion recently organised by MARC Ratings Bhd when presenting global and market outlook for the second half of 2025 (2H25).
Moderated by MARC Ratings chief economist Dr Ray Choy, the panel included Bank Negara Malaysia (BNM) assistant governor Mohd Fraziali Ismail, former Deputy Minister Dr Ong Kian Ming and University of Nottingham Asia Research Institute Malaysia honorary research associate Professor Dr Bridget Welsh.
The session explored the intensification of trade tensions, US tariff strategies, supply chain recalibration and the regional response from ASEAN economies.
The panel examined the far-reaching consequences of recent US trade policies, particularly those adopted under the Trump administration, which were characterised as being driven more by short-term political motives and optics rather than by coherent, long-term economic planning.
Nonetheless, the panelists noted that these policies were exerting real and lasting pressure on global supply chains, prompting businesses and governments alike to reassess their dependencies and strategic trade relationships.
Focusing on Malaysia, the panel members agreed that retaliation is unlikely to be effective or desirable, noting that a negotiated, sector-specific approach was identified as the more strategic path forward.
Key among Malaysia's priorities should be securing exemptions from semiconductor-related tariffs, given the sector's importance to the national economy and its role in global technology supply chains.
Additionally, there was strong emphasis on maximising existing trade frameworks — such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) — to boost exports, particularly in high-impact sectors such as palm oil.
Malaysia was also encouraged to continue pursuing new free trade agreements (FTAs) to diversify its trade portfolio and enhance long-term resilience, according to a statement released by MARC Ratings.
On monetary and financial policy, the statement noted that the panel observed that the ringgit remains predominantly influenced by external factors, including global monetary tightening, capital flows and investor sentiment.
While domestic policy can play a role in managing short-term volatility, its ability to counteract structural global trends is limited, it added. — TMR
This article first appeared in The Malaysian Reserve weekly print edition