Malaysia posts record-high trade in July, wary on tariffs

KUCHING: Malaysia's trade hit a record high in July 2025 but analysts cautioned that uncertainties from US tariffs and a cloudy semiconductor outlook could weigh on momentum in the months ahead.

According to the Ministry of Investment, Trade and Industry (MITI), trade rebounded by 3.8 per cent year-on-year (y-o-y) to RM265.92 billion, the strongest monthly performance on record.

Exports rose 6.8 per cent to RM140.45 billion, the highest since September 2022, while imports inched up 0.6 per cent to RM125.47 billion.

This resulted in a RM14.98 billion trade surplus, marking the 63rd straight month of surplus.

Maybank Investment Bank Bhd (Maybank IB) in a note on Wednesday said the rebound was likely due to another round of front-loading ahead of the reciprocal tariff deadline on Aug 7.

It said it expect external trade to remain on “choppy waters” as US tariff uncertainties persist amid the prospect of more product or sector-specific tariffs by the US, with eyes on semiconductor – Malaysia's major exports to the US.

The US finalised reciprocal tariffs at the end of July, with Malaysia subjected to a 19 per cent rate which was lower than the original 24 per cent announced in April and the revised 25 per cent stated in President Donald Trump's July 7 letter.

“This could well be behind the export rebound last month on another round of frontloading ahead of reciprocal tariff deadline,” it said.

Maybank IB noted that the ongoing Section 232 investigation on semiconductor imports by the US Commerce Department could further impact Malaysia's shipments once recommendations are made.

RHB Investment Bank Bhd (RHB Research) in a separate note also warned of the gradual tariff impacts on trade and manufacturing later this year even with short-term relief from reduced tariff rates and an extended US-China trade truce until Nov 10.

“We remain vigilant to potential downside risks, including developments in US tariff policies and shifts in regional trade dynamics and the possible introduction of sectorspecific levies particularly on semiconductors.

“This could affect Malaysia's US$12.4 billion in semiconductor and integrated circuits exports to the US, representing 3 per cent of nominal GDP and roughly 28 per cent of Malaysia's exports to the US,” it said.

On a brighter note, RHB Research noted that Malaysia's close integration with US supply chains, anchored by global players like Intel and Texas Instruments, may secure partial exemptions to soften the blow.

Nonetheless, it maintained a cautious view, projecting GDP growth at 4.2 per cent for 2025, already factoring in tariff impacts, with growth expected to moderate further in 2026.