Economists say a US Supreme Court ruling limiting Trump’s tariff powers reduces uncertainty and slightly improves the outlook for Malaysian exporters.
PETALING JAYA: The United States (US) Supreme Court’s decision to strike down US President Donald Trump’s sweeping global tariffs has reinforced legal limits on executive trade powers and slightly eased the risk landscape for Malaysian exporters, say economists.
Malacca Universiti Teknologi Mara finance lecturer Dr Idham Razak said the ruling underscores that tariff measures must remain anchored in statutory authority.
“The ruling is significant because it reinforces legal limits on executive trade powers and signals that tariff actions must remain grounded within statutory authority rather than broad national emergency interpretations.
“On Friday, the Supreme Court ruled that Trump had exceeded his authority when he imposed tariffs on nearly every US trading partner last year.
Idham said the immediate impact for Malaysia is largely indirect, especially as the Agreement on Reciprocal Trade (ART) has yet to be ratified.
“However, the decision reduces uncertainty surrounding sudden tariff escalations. It also suggests a more rules-based US trade environment which generally benefits export-oriented economies like Malaysia that depend on predictable market access,” he told theSun.
He added that the ruling slightly improves the overall risk outlook for Malaysian exporters, particularly those in electronics, electrical goods and manufacturing sectors.
“Exporters in these sectors may view this as supportive for medium-term planning because it lowers the probability of sweeping unilateral tariffs being imposed without legal scrutiny.”
Idham said the ruling does not eliminate trade risks entirely.
“US trade policy can still shift through other legal channels such as anti-dumping duties or sector-specific safeguards.
“The US retains multiple legal mechanisms to impose tariffs or trade remedies, including national security provisions, trade investigations or congressional legislation.”
He said Malaysia must continue strengthening trade diplomacy, diversifying export markets and enhancing product upgrading to keep exporters competitive amid policy swings in major economies.
Idham identified electrical and electronics, semiconductor supply chains, machinery components, rubber products and palm oil derivatives as sectors most vulnerable to new trade measures.
“These sectors are deeply integrated into global value chains linked to US demand, meaning any tariff adjustment can quickly affect export volumes and investment decisions.”
He added that diversifying trade partners remains critical.
“Expanding trade ties within Asean, the Middle East, India and other emerging markets helps reduce risks.
“Malaysia’s participation in regional trade agreements and economic corridors already strengthens resilience against policy volatility from any single major trading partner.”
On investment sentiment, Idham said uncertainty around US trade measures could prompt investors to adopt a cautious approach, particularly in export-dependent industries.
“Malaysia can offset this by maintaining policy clarity, consistent industrial incentives and institutional credibility.
“Stable macroeconomic management, transparent regulations and proactive engagement with investors will preserve confidence even amid global trade policy fluctuations.”
Malaysia University of Science and Technology Prof Emeritus Dr Barjoyai Bardai said the US still retains mechanisms to maintain tariffs on its trading partners.
“We have not yet ratified the ART, and this does not directly impact us at the moment. However, we need to remain cautious about its eventual implementation and emphasise necessary amendments.”
Barjoyai suggested including a clause committing the US not to raise tariffs beyond the current 19% rate without at least 180 days of bilateral negotiations.
“Without this guarantee, Malaysia remains exposed to shifts in US tariff policy as seen with South Korea and other Asean countries.”
He stressed the need for a stronger halal protection clause, provisions safeguarding Bumiputera priorities and public interest obligations as well as a “safe exit” protocol allowing withdrawal from ART without economic penalties.
“If Malaysia needs to withdraw, there should be a transition period of 12 to 18 months during which existing US tariff rates are maintained while new negotiations take place.”
The Sun Malaysia
